BENGALURU: The Indonesian rupiah firmed sharply, and long-end bond yields jumped to over three-year highs on Tuesday after the central bank delivered an off-cycle interest rate hike to put a floor under the rapidly weakening currency.
The rupiah appreciated to 18,020 per dollar immediately after the surprise rate hike, but gave up those gains, settling at 18,050. Stocks trimmed gains immediately after the hike but later advanced as much as 5.5 percent.
Yield on 10-year bonds jumped to 7.517 percent, the highest since November 2022, highlighting investor concerns over the country’s fiscal outlook and persistent pressure on the rupiah.
Bank Indonesia (BI) raised interest rates by 25 basis points (bps) just days ahead of its scheduled policy meeting as the currency remained under mounting pressure and hit a series of record lows.
The MSCI EM Asia equities index advanced 4 percent, largely driven by stocks in South Korea and Taiwan , which now make up more than half of the index. A gauge tracking ASEAN stocks also jumped 1.5 percent.
South Korea’s benchmark KOSPI index ended the day 8.2 percent higher, recovering most of its losses from the previous session. Top chipmakers Samsung Electronics and SK Hynix gained 9 percent and 16 percent, respectively.
Taiwan’s benchmark index ended the day 2.8 percent higher, with the world’s top contract chipmaker, TSMC, adding 0.4 percent.
Both the tech-heavy gauges in South Korea and Taiwan are up 92 percent and 54 percent, respectively, for the year, with the former being the best-performing index in the world.
In Southeast Asia, Singapore’s FTSE Straits Times Index , Thailand’s SET index, and the Philippine benchmark index advanced more than 1 percent each, while stocks in Malaysia erased early gains to trade flat.
Currencies were largely muted: the Philippine peso, the Singapore dollar, and the Indian rupee inched higher, while the Thai baht slipped marginally to 32.875 a dollar.
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