BENGALURU: Emerging Asian currencies made a subdued start to October as rising global bond yields continued to erode the region’s rate advantage, while Indonesian assets held onto losses after inflation accelerated as expected.
Regional currencies extended last month’s weak run, when most posted losses as bond yields reached decade highs, major economies tightened policy to curb sticky inflation, and oil stayed above USD100 a barrel as the US-Iran war dragged on after an early-month escalation.
Nearly all regional currencies retreated, with MSCI’s gauge of EM currencies down 0.3 percent.
In Indonesia, the Jakarta Composite Index extended losses slightly to 0.8 percent after data showed annual inflation quickened to 3.28 percent in September, as expected. That puts it near the top of Bank Indonesia’s 1.5 percent to 3.5 percent target range, with fuel and food prices driving the increase.
The rupiah depreciated as much as 0.5 percent, leading losses in the region. The currency has weakened more than 7 percent this year, the worst performing in Southeast Asia, as price pressures from the Iran war have added to long-running concerns about policymaking and fiscal slippage.
That slump has prompted Bank Indonesia to raise rates by a combined 100 basis points over May and June.
Separate data showed Southeast Asia’s largest economy posted a surprisingly large trade surplus of USD3.55 billion in August, far above the roughly USD630 million forecast in a Reuters poll.