BENGALURU: The Indonesian rupiah led gains in Asian currencies on Thursday, as the US dollar languished near multi-week lows on growing expectations that the Federal Reserve will cut interest rates next month.
The rupiah strengthened as much as 0.62% to a seven-month high of 16,090 per US dollar, extending its recovery from March when it hit its lowest level since June 1998. It currently trades about 1% below 2024-end levels.
Jakarta stocks rose nearly 1%, advancing for a fifth straight session.
The Malaysian ringgit advanced as much as 0.4% to a level unseen in more than six weeks, while the Taiwan dollar
and Chinese yuan were largely unchanged. The Philippine peso and South Korean won, however, lost more than 0.3% each.
The dollar’s weakness came from increasingly dovish Federal Reserve signals as labour market indicators soften, and a lack of meaningful impact on inflationary pressures from President Donald Trump’s tariffs.
Traders see a Fed rate cut on September 17 as a near certainty, according to LSEG data, with around 7% odds of a super-sized half-point reduction.
“Most asset classes from bonds to equity to cryptocurrency to non-US Dollar foreign exchange are rallying,” said Christopher Wong, currency strategist at OCBC.
“This comes on the back of softer US data – softer labour market in particular and that inflation report shows tariff impact is limited for now.”
The US dollar index traded flat on Thursday after dropping 0.8% over the previous two sessions, hitting 97.626 on Wednesday for the first time since July 28.
While the next Fed meeting is more than a month away, next week’s Jackson Hole symposium looms as a key event.
Historically, the gathering has served as a platform for signalling shifts or reinforcing monetary policy directions.
On Wednesday, Thailand’s central bank cut its key rate by 25 basis points – its fourth reduction in 10 months.
The Thai baht was flat and Bangkok stocks lost 0.81%.
Mumbai and Seoul shares both rose more than 0.2%, while Singapore and Taiwan equities fell 0.3% each.
Meanwhile, the Japanese yen was the biggest FX mover in Asian trading, climbing to a three-week high of 146.38 per dollar after Bessent told Bloomberg Television that the Bank of Japan had gotten “behind the curve” by delaying rate hikes.