The Indonesian rupiah hit a 17-year low versus the dollar on Thursday as Asian currencies slipped in the wake of a rise in US bond yields and due to caution ahead of US jobs data. The rupiah fell to 13,290 versus the dollar, its lowest since August 1998, according to Thomson Reuters data.
Indonesia's central bank said earlier in the day that it stood ready to intervene in the foreign exchange and bond markets to ensure stability. The rupiah is the worst-performing Asian currency so far this year, dented by corporate demand for the dollar as well as concerns over Indonesia's economic slowdown and its chronic current account deficit. The official Jakarta Interbank Spot Dollar Rate was fixed at 13,243 rupiah per dollar, the weakest since the central bank introduced it in 2013 to manage exchange rate fluctuations.
Analysts said Asian currencies were weighed down by a rise in US Treasury yields, which can enhance the greenback's appeal. The rupiah and other Asian currencies could face more selling pressure if US jobs data on Friday and the Federal Reserve's policy meeting on June 16-17 bolster expectations for US interest rates to rise later this year, they added. The US 10-year Treasury yield hit an eight-month high of 2.425 percent on Thursday, in the wake of a solid US private sector employment report for May and a jump in German bond yields.
The recent weakness in Asian equities also bears watching, said Philip Wee, a senior currency economist for DBS Bank. "Some have started to turn negative year-to-date, including the KLSE," Wee said, referring to Malaysian equities. The Singapore dollar rose to as high as 2.7519 against the Malaysian ringgit, hitting its highest on Thomson Reuters data going back to 1990. The move was due to the relative resilience of the Singapore dollar and weakness in the ringgit, analysts at Maybank said in a research note. Against the US dollar, the ringgit is likely to see "further volatility" ahead of a meeting of the Organization of the Petroleum Exporting Countries on Friday and US jobs data, they said. The ringgit is sensitive to moves in oil prices as Malaysia is a net exporter of oil.
Comments
Comments are closed.