Asian FX weak on Fed rate outlook; Indonesian rupiah leads losses

Reuters

Asian FX weak on Fed rate outlook; Indonesian rupiah leads losses

sep 9, 2024 om 6:50 am GMT

<html xmlns="http://www.w3.org/1999/xhtml"><head><title>EMERGING MARKETS-Asian FX weak on Fed rate outlook; Indonesian rupiah leads losses</title></head><body>

Rupiah clocks worst session in two weeks

Taiwan dollar logs biggest percentage loss in one month

Asian equities mixed; Taipei market top laggard

By Roushni Nair and Rajasik Mukherjee

Sept 9 (Reuters) -Asian currencies slipped on Monday, with the Indonesian rupiah leading losses, as investors hesitated to make riskier bets ahead of a key U.S. inflation data later in the week that could provide clarity on the size of a likely rate cut this month.

The Indonesian rupiah IDR= weakened as much as 0.7%, as of 0616 GMT, to post its biggest intraday percentage decline since Aug. 27. The Malaysian ringgit MYR= and the Taiwanese dollar TWD=TP followed suit to lose as much as 0.5% and 0.6%, respectively.

Investors analysed last week's mixed U.S. jobs data and comments from Federal Reserve officials,which suggested a weak labour market but without sufficient justification for a 50-basis-point interest rate cut.

The U.S. inflation report on Wednesday will be a key indicator that could shift market expectations for the outcome of Fed's Sept 17-18 meeting.

The U.S. dollar index USD=, which tracks the currency's value against six major peers, rose by 0.3% to 101.35. The broad MSCI emerging markets currency index .MIEM00000CUS was down 0.3%, heading for its worst session in more than two weeks.

Indonesia's rupiah was under pressure from overly ambitious expectations of a U.S. rate cut, Fakhrul Fulvian, an economist at Trimegah Securities said, adding that hopes of lower issuance of rupiah securities by Bank Indonesia were likely to normalise the currency market.

Equities in the region were range-bound, with those in Taipei .TWII and Seoul .KS11 down as much as 2% each, while shares in Manila .PSI and Singapore .STI advanced more than 1% each. Shares in Jakarta .JKSE slipped 0.8% and Thailand .SETI recouped early losses to trade flat.

Taiwan and South Korea's economies are closely tied to the U.S. through significant foreign investment and strong trade ties, making them vulnerable to changes in U.S. monetary policy, which has a direct impact on their stock markets.

Thailand's shares surged more than 5% last week, extending a four-week rally, driven by improving sentiment as political instability fades and optimism grows over the incoming Vayupak Fund, a state investment fund expected to boost capital inflows.

Malaysian stocks .KLSE traded flat, although shares of 99 Speed Mart Retail IPO-99SP.KL jumped more than 16% in market debut after the mini-market chain retailer raised 2.36 billion ringgit ($543 million) in the country's biggest listing in seven years.

In China, investors are growing cautious as inflation in Southeast Asia's largest trading partner accelerates to a six-month high, adding to pressure on the government to implement more policies to address a sluggish economy, housing downturn, joblessness, debt woes, and rising trade tensions.

Shares in Shanghai .SSEC slipped over 1%, while the yuan CNY=CFXS was last up 0.1%.

($1 = 4.3450 ringgit)

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 3.3 basis points to 6.89%

** Japan's Q2 GDP growth revised down; softer consumption to test BOJ policy

Asia stock indexes and currencies at 0624 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.45	-1.29	.N225	-0.48%	8.79
China	CNY=CFXS	-0.13	-0.16	.SSEC	-1.18	-8.13
India	INR=IN	+0.01	-0.88	.NSEI	0.08	14.45
Indonesia	IDR=	-0.49	-0.26	.JKSE	-0.84	5.29
Malaysia	MYR=	-0.51	+5.52	.KLSE	0.08	13.73
Philippines	PHP=	-0.17	-1.57	.PSI	1.14	8.76
S.Korea	KRW=KFTC	-0.01	-3.88	.KS11	-0.40	-4.56
Singapore	SGD=	-0.04	+1.24	.STI	0.91	7.58
Taiwan	TWD=TP	-0.60	-4.31	.TWII	-1.36	17.92
Thailand	THB=TH	-0.44	+0.89	.SETI	0.09	0.93