The Indonesian rupiah hit a five-month low on Monday, the biggest laggard among mixed Asian currencies, while regional stocks strengthened as upbeat Chinese manufacturing data buoyed optimism on demand in the world’s second-biggest economy.
The rupiah fell as much as 0.4% to 15,905 per US dollar, its lowest since Nov. 1, and Indonesian shares fell 1.3% after data on Monday showed annual inflation rose more than expected last month to 3.05%, the highest rate in seven months.
The currency’s weakness is based on “the expectation of deteriorating trade balance months ahead,” said Fakhrul Fulvian, economist at Trimegah Securities said, adding “we continue to see IDR depreciation is more likely going ahead.”
Other Asian currencies were largely subdued, with the Taiwanese dollar up 0.1%. The Thai baht and Singapore dollar were unchanged, while the Indian rupee was not trading because of the Easter holiday.
Asian markets were lifted by the prospect of a recovery in Chinese demand after data showed manufacturing activity expanded at the fastest pace in 13 months last month.
Asian currencies dip on US inflation data, some stocks hit records
Stocks in China jumped 1%, their highest in two weeks. Following suit, shares in Singapore, the Philippines and Malaysia rose between 0.5% and 0.1%.
“China’s PMI holding up is offering some reasons (for Asian FX) to be optimistic,” said Christopher Wong, OCBC’s currency strategist.
As at 0415 GMT, the yuan was trading 0.1% lower at 7.228 per US dollar, reversing gains on Friday.
“Apart from USD, moves in JPY and RMB will also be in focus as they can influence Asian FX,” Wong added.
In the US, the latest core personal consumption expenditures (PCE) price index data, the Federal Reserve’s preferred inflation gauge came in “more along the lines of what we want to see,” the Fed Chair Powell said.
Markets now await March inflation data from South Korea and Thailand, a key metric which will determine their central bank stances later.
“Thailand’s data will be in greater focus as a softer-than- expected print should add to expectations of earlier BOT cut. This may have implications on THB,” OCBC’s Wong said.
Traders will also keep tabs on US March manufacturing PMI data, and the Philippines February budget balance, due later in the day.