BENGALURU: The Indonesian rupiah was pinned near its weakest level in five months on Thursday as emerging Asian currencies fell to multi-month lows weighed down by a firm US dollar.
The rupiah fell for a sixth consecutive session, its longest losing streak since mid-December. It was last down 0.4 percent at its lowest point since late April.
Bank Indonesia’s shock interest rate cut last week was viewed as bowing to President Prabowo Subianto’s push to fast-track growth, which could jeopardize the country’s fiscal credibility.
This has piled pressure on the rupiah, which was already plagued by unrest in the country and the abrupt removal of a long-serving finance minister.
“Recent policy push towards supporting growth via expansionary fiscal policy and dovish monetary policy combination can be seen as marginally negative for IDR,” analysts at BofA said in a note.
“Liquidity injections and rate cuts would offset the impact of further Fed rate cuts by keeping rate differentials steady and reducing the carry appeal for IDR.”
BofA analysts see the rupiah trading around 16,300 per dollar by the end of this year, assuming marginal appreciation in the fourth quarter due to a weaker greenback.
Thailand’s baht fell 0.2 percent to a three-week low. It broke above the 32-per-dollar mark in the previous session after holding below it for three weeks. Authorities are acting to rein in the currency’s gain, which is hurting exports and tourism.
Ratings agency Fitch revised its outlook for Thailand to “negative” from “stable”, citing rising risks to public finance and lingering political uncertainty.
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