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EMERGING MARKETS-Rupiah rises as central bank calms independence fears

Credit: REUTERS/Thomas White

Indonesia's rupiah hit a more than two-week high on Friday, a day after the central bank kept interest rates unchanged and supported by reassurances monetary policy would not be swayed by political influences.

By Anushka Trivedi

Sept 18 (Reuters) - Indonesia's rupiah hit a more than two-week high on Friday, a day after the central bank kept interest rates unchanged and supported by reassurances monetary policy would not be swayed by political influences.

Helped by a broadly weaker dollar, the rupiah IDR= advanced 0.6% and was set for its best day since Aug. 31 after three-weeks of local market volatility, which was driven by concerns about the economy and moves by some lawmakers to change rules around central bank independence.

Asked about 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.

Analysts and traders said the bank had settled some nerves for now, although several stressed that the threats to growth from a surge in coronavirus cases meant policymakers would be under pressure to cut rates as soon as possible.

"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."

Stocks in Jakarta .JKSE snapped a three day losing run to gain 0.3%.

Other regional currencies advanced as lacklustre U.S. jobs data overnight kept the dollar subdued, with the South Korean won KRW=KFTC and the Taiwan dollar TWD=TP firming 1.1% and 0.8%, respectively, to lead gains.

Asian stocks ignored a weak finish on Wall Street to rise, with Malaysia .KSLE and Thai equities .SETI rising 0.4% and 0.1%.

The Bangkok market was set for its first weekly gain in three, while the baht THB=TH was on course to appreciate for a second straight week, ahead of a central bank meeting next week.

Thailand's tourism- and export-reliant economy has been reeling from weakened demand amid the coronavirus 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

** Malaysia's 3-year benchmark yield ID3YT=RR is up 1.1 basis points at 1.942%

** Top gainers on the Thailand's SETI .SETI include Food and Drinks PCL FND.BK up 15% and Union Pioneer PCL UPF.BK up 14.78%

** In the Philippines, top index losers are Universal Robina URC.PS, down 2.26%, Ayala Land ALI.PS down 1.75% and Puregold Price Club PGOLD.PS, down 1.53%

Asia stock indexes and currencies at 0505 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.05

+3.66

.N225

0.15

-1.27

China

CNY=CFXS

+0.14

+3.08

.SSEC

0.57

7.83

India

INR=IN

+0.41

-2.69

.NSEI

0.36

-5.02

Indonesia

IDR=

+0.58

-5.80

.JKSE

0.19

-19.87

Malaysia

MYR=

+0.29

-0.87

.KLSE

0.44

-4.34

Philippines

PHP=

+0.12

+4.69

.PSI

-0.87

-24.61

S.Korea

KRW=KFTC

+1.13

-0.42

.KS11

-0.03

9.45

Singapore

SGD=

+0.04

-0.86

.STI

-0.20

-22.56

Taiwan

TWD=TP

+0.79

+3.53

.TWII

0.15

7.46

Thailand

THB=TH

+0.16

-3.95

.SETI

0.09

-18.63

(Reporting by Anushka Trivedi, Shashwat Awasthi in Bengaluru and Scott Murdoch in Hong Kong; Editing by Patrick Graham and Sam Holmes)

((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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