BENGALURU: Asian currencies slipped on Monday, with the Indonesian rupiah leading losses, as investors hesitated to make riskier bets ahead of a key US inflation data later in the week that could provide clarity on the size of a likely rate cut this month.
The Indonesian rupiah weakened as much as 0.7%, as of 0616 GMT, to post its biggest intraday percentage decline since Aug. 27. The Malaysian ringgit and the Taiwanese dollar followed suit to lose as much as 0.5% and 0.6%, respectively.
Investors analysed last week’s mixed US 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 US 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 US dollar index, which tracks the currency’s value against six major peers, rose by 0.3% to 101.35. The broad MSCI emerging markets currency index 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 US 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 and Seoul down as much as 2% each, while shares in Manila and Singapore advanced more than 1% each. Shares in Jakarta slipped 0.8% and Thailand recouped early losses to trade flat.
Taiwan and South Korea’s economies are closely tied to the US through significant foreign investment and strong trade ties, making them vulnerable to changes in US monetary policy, which has a direct impact on their stock markets.
Source: Brecorder
