EM ASIA-Rupiah jumps after c.bank allays fears over autonomy

Credit: REUTERS/Thomas White

Indonesia's rupiah rose to a more than two-week high on Friday, taking heart from central bank assurances of its freedom from political influence and a decision to keep interest rates steady in aid of supporting the currency.

By Anushka Trivedi

Sept 18 (Reuters) - Indonesia's rupiah rose to a more than two-week high on Friday, taking heart from central bank assurances of its freedom from political influence and a decision to keep interest rates steady in aid of supporting the currency.

Helped by a weaker dollar, the rupiah IDR= firmed 0.6% and local stocks .JKSE also rose, putting both on course for weekly gains after two weeks of volatility driven by concerns about the economy and proposals to change the central bank law to hand government more say in policymaking.

Asked about the deliberations in parliament, Governor Perry Warjiyo said on Thursday President Joko Widodo and Finance Minister Sri Mulyani Indrawati had both pledged that monetary policy would remain independent.

"It appears that Bank Indonesia wants to send out a message about their independence by keeping the rate unchanged," said Societe Generale economist Kunal Kundu.

"The question remains whether a weakening economy and lower growth potential can be ignored going forward."

Joseph Incalcaterra, HSBC Global Research's chief ASEAN economist, said that a window to trim the rates may open up later this year, likely after the U.S. presidential election.

Other Asian currencies gained ground after downbeat U.S. jobs data overnight and the Federal Reserve's promise to keep interest rates at a record low weighed on the dollar .DXY.

The South Korean won KRW=KFTC and the Taiwan dollar TWD=TP advanced about 1% each to lead gains in the region.

The won outperformed to end the week over 2% firmer, its fastest weekly gain since early June, while the local bourse .KS11 also rose 0.3% on foreign buying. KRW/

Most Asian stock markets eked out modest gains after a day of major global central bank meetings where adequate monetary support was promised but without much details.

Singapore .STI, which is moving to try and reopen its economy even as coronavirus cases continue to emerge in migrant worker dormitories, was up just 0.3% on the week.

Thai stocks .SETI were set to end higher for the first week in three, while the baht THB=TH remained on course to appreciate for a second straight week, ahead of a central bank meeting on Wednesday.

Thailand's tourism- and export-reliant economy has been reeling from weakened demand amid the COVID-19 pandemic, though the recent removal of most virus restrictions has given markets some hope.

"In my view, we have seen the worst of the capital outflows from Thailand," said Nader Naeimi, head of dynamic markets at AMP Capital.

"The most significant catalyst for foreign inflows from here is success in phase-three COVID vaccine trials," he said, adding that conditions for an upturn in markets were in place.

HIGHLIGHTS

** Indonesian 3-year benchmark yields ID3YT=RR are down 0.6 basis points at 5.102%

** Top Glove TPGC.KL climbs 5% on plans to list on HK after record profit, boosts Malaysia index .KLSE

** In the Philippines .PSI, top index losers are SM Investments Corp SM.PS down 3.65% and Bloomberry Resorts Corp BLOOM.PS down 3.02%

Asia stock indexes and currencies at 0737 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.15

+3.86

.N225

0.18

-1.25

China

CNY=CFXS

+0.12

+3.06

.SSEC

2.07

9.44

India

INR=IN

+0.33

-2.77

.NSEI

0.38

-5.00

Indonesia

IDR=

+0.54

-5.83

.JKSE

0.31

-19.77

Malaysia

MYR=

+0.29

-0.87

.KLSE

0.39

-4.39

Philippines

PHP=

+0.08

+4.65

.PSI

-0.58

-24.39

S.Korea

KRW=KFTC

+1.22

-0.34

.KS11

0.26

9.77

Singapore

SGD=

+0.06

-0.85

.STI

-0.12

-22.50

Taiwan

TWD=TP

+1.01

+3.75

.TWII

0.02

7.32

Thailand

THB=TH

+0.22

-3.89

.SETI

-0.04

-18.73

(Reporting by Anushka Trivedi, Shashwat Awasthi in Bengaluru and Scott Murdoch in Hong Kong; Editing by Ramakrishnan M.)

((Anushka.Trivedi@thomsonreuters.com; +918061823241;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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