Asian currencies: Rupiah firmer against dollar

****BENGALURU: Indon esia’s rupiah erased early losses to firm slightly on Wednesday, while stocks slid, as Bank Indonesia stunned markets by pausing its rate-cut cycle after three straight reductions, choosing to defend the currency, the region’s weakest this year.****

Jakarta shares fell 0.8 percent after the central bank held its benchmark rate at 4.75 percent, prioritising currency stability over further stimulus. A Reuters poll had predicted a 25 basis-point rate cut.

The rupiah, Southeast Asia’s worst performer this year, pared early losses to rise 0.1 percent against the dollar, though it remains down 2.90 percent year-to-date after 150 basis points of cuts since late-2024.

“.....policymakers appear focused on anchoring the rupiah and preserving room for future easing..... In my view, a pause here is prudent and tactical,” said Mohit Mirpuri, fund manager at SGMC Capital.

Ryota Abe at SMBC Singapore said the brokerage still expects a cut in the December quarter after Indonesia’s third-quarter economic data, given the relatively high real policy rate.

“USD/IDR likely stays range-bound near 16,500,” he added.

Elsewhere, regional stocks were mixed. Taiwan’s benchmark

eased 0.37 percent, Malaysia dropped 0.67 percent and the Philippines slid 1.03 percent.

Thailand bucked the trend, gaining 1.25 percent, while Shanghai dipped 0.07 percent.

The MSCI EM Asia index fell 0.9 percent, reversing earlier gains.

Asian currencies beyond Indonesia were muted. The Philippine peso slipped 0.2 percent, the Taiwan dollar lost 0.1 percent, while the South Korean won added 0.1 percent.

The Malaysian ringgit and Singapore’s dollar traded flat.

Renewed uncertainty over a high-level US-China meeting and the postponement of a US-Russia summit dampened regional sentiment.

While trade tensions between Washington and Beijing have eased in recent weeks, ambiguity lingered after US President Donald Trump said on Tuesday that a meeting with his Chinese counterpart “maybe won’t happen.”

Meanwhile, Asian bonds saw significant outflows in September, driven by a selloff in Indonesia and broader concerns over fiscal stability and slowing regional growth.

The dollar index firmed 0.1 percent as the yen and euro slipped, following the appointment of fiscal dove Sanae Takaichi as Japan’s prime minister.

Japan’s Nikkei share average nudged higher in afternoon trade, recovering from earlier losses, as investors welcomed reports that Takaichi is preparing a sizeable stimulus package aimed at curbing inflation.

Investor focus is now on US retail inflation report, due on Friday in the midst of the continuing government shutdown. While markets have already fully priced in a 25-bp cut at next week’s Federal Reserve meeting, the data could influence expectations of further easing.