BENGALURU: The Indonesian rupiah strengthened and stocks extended gains on Wednesday, a day after an off-cycle rate hike surprised markets, while equities in South Korea tumbled on escalating tensions in the Middle East, triggering a trading halt.
Asian stocks have been whipsawed by shifting headlines from the Middle East, with a fragile ceasefire repeatedly marred by fresh military flare-ups.
A closely watched US inflation reading later in the day will be the next major market test.
The MSCI EM Asia index slumped 2.8 percent, dragged primarily by a plunge in South Korean stocks, and a more than 3 percent drop in Taiwanese equities.
The rupiah firmed sharply to 17,875 per dollar at the open, keeping to the stronger side of the psychological 18,000 mark. Stocks in Jakarta jumped 3.2 percent, building on Tuesday’s 7.6 percent advance.
Major banks in Indonesia — Bank Central Asia, Bank Mandiri, and Bank Rakyat Indonesia — advanced between 3 percent and 10 percent, extending gains.
Bank Indonesia on Tuesday raised interest rates by 25 basis points to stem a decline in the rupiah, which is down more than 7 percent this year, putting it among the world’s worst-performing currencies.
South Korea’s benchmark KOSPI index tumbled 4.5 percent, with Samsung Electronics and SK Hynix losing around 6 percent and 7 percent, respectively. The sharp drop triggered a sidecar mechanism to temporarily halt selling for the second time this week.
Meanwhile, the won appreciated to 1,527.7 per dollar, firming around 2.3 percent so far this week as authorities stepped up their crackdown on speculative trading.