JAKARTA (Reuters): The Indonesian rupiah gained ground on Monday after stumbling to near five-month lows last week as the central bank stayed vigilant against currency volatility, while most of its regional peers also crept higher against a wobbly dollar.
Indonesia’s currency rose as much as 0.5% to 16,650 against the dollar, after ending last week near its weakest since April 30.
Asian equities also gained as investors eyed a U.S. payrolls report, due later in the week, which could prove crucial to the Federal Reserve’s rate cut trajectory, though a possible government shutdown threatened to cloud the economic outlook.
The MSCI’s EM Asia equities index rose 1.4% to mark its best intra-day gain in more than two weeks, led by South Korea’s KOSPI, which rebounded over 1% from Friday’s two-week low.
The MSCI gauge was on course to snap a seven-day losing streak, powered by strength in Singaporean banks.
Thai stocks climbed up to 0.9%, with risk appetite improving on the government’s efforts to revive the economy.
Prime Minister Anutin Charnvirakul laid out his policy agenda in parliament, focusing on measures to tackle living costs, household debt, and bolster tourism.
Last week, he signaled plans to dissolve parliament by January, paving the way for an election in March or early April. Poon Panichpibool, a markets strategist with Krung Thai Bank, said that plans of dissolving parliament by January may ease some political uncertainty.
Equities elsewhere traded higher, with Singapore and Indonesia up 0.2% each. India and China gained between 0.1% and 0.9% while Jakarta stocks were trading around 20 points shy of a record close.
Philippine stocks were an outlier, falling 0.5% and extending losses for a sixth straight session amid a government corruption probe and a weak peso. The Singapore dollar and Malaysian ringgit rose 0.1% and 0.2%, respectively.
The dollar eased as investors awaited a raft of economic data and weighed shutdown risks.
“Asian currencies are likely to be heavily influenced by the upcoming U.S. nonfarm payroll data. We expect labour market conditions in the U.S. to remain relatively soft, which could keep the U.S. dollar under downward pressure,” said Lloyd Chan, a senior currency analyst with MUFG.
“This environment may provide broad support for Asian currencies, particularly those with trade surpluses and exposure to the tech up-cycle.”
Looking ahead, markets eye Fed Chair Jerome Powell’s public remarks and economic releases, which could shape the path of rate decisions.
Taiwan markets were closed for a holiday. Chinese markets will remain closed for a week starting October 1, which may affect trading volumes in the region. – Reuters
