Indonesian rupiah, Malaysian ringgit extend losses; markets eye rate calls

SPONSORED ARTICLES

How logistics industry experts plan to ‘move forward’ after COVID-19

Reasons why Filipinos love Korean culture and products

Why Batangas is the destination for budget-friendly family holidays

• S.Korean won subdued after impeachment of president
• Rupiah falls past 16,000 per dollar, lowest in 4 months
• Indonesia, Thailand to hold rates steady this week

Asian markets wavered on Monday, with the Malaysian ringgit and Indonesian rupiah dipping slightly and stocks trading lower as investors await rate decisions this week from local central banks and the U.S. Federal Reserve.

The rupiah <IDR=> weakened by as much as 0.2% to breach the psychologically significant 16,000 per U.S. dollar threshold, potentially influencing Bank Indonesia’s (BI) monetary policy decision on Dec. 18, where it is expected to maintain interest rates.

The rupiah has declined more than 6% from its September peak despite central bank intervention, and is now at the forefront of policymakers’ concerns after four consecutive sessions of falls.

The Malaysian ringgit <MYR=> extended its six-session decline, falling 0.1% to its lowest since Dec. 4, under pressure from expectations of higher headline inflation in Friday’s data release.

While the Bank Negara Malaysia is likely to maintain rates at its Jan. 22 meeting, the absence of an explicit inflation target could provide room for potential rate cuts in 2025 if economic growth significantly decelerates, analysts said.

The South Korean won <KRW=KFTC> initially rose 0.5% following President Yoon Suk Yeol’s impeachment over the weekend, but later reversed course to fall 0.2% to 1437.5 by 0723 GMT, reflecting political uncertainty.

“The won may strengthen towards 1,400 in Q1, offering importers a window for FX risk hedging,” said Poon Panchibool, a markets strategist with Krung Thai Bank.

However, potential tariff hikes under the administration of incoming U.S. President Donald Trump could weaken the won, he said.

Globally, the U.S. dollar index <=USD> hovered near a three-week high of 107.18, as investors anticipate the Fed’s rate decision on Dec. 18 and potentially slower monetary easing in 2025, despite expectations of an initial cut. [USD/]

The Bank of Thailand is widely expected to keep rates steady on Wednesday, while the Philippines central bank is expected announce a rate cut on Thursday, following a 25-basis-point reduction in October.

The Thai baht <THB=TH> and the Philippine peso <PHP=> largely traded flat.

Most Asian equities were subdued on Monday, with those in Bangkok <.SETI> down 1.1% and Jakarta <.JKSE> down nearly 1%. Shares in Mumbai <.NSEI> fell 0.5% while those in Manila <.PSI> were flat.

The Bank of Japan is expected to decide on its interest rate on Thursday, with sources saying that the central bank would keep the rates unchanged as policymakers seek more time to better gauge the overseas risks and clues on next year’s wage outlook, Reuters reported last week.

HIGHLIGHTS:

** China’s factory output up, but consumption still a drag

** Domestic, global headwinds challenge Indian central bank’s fx intervention

** South Korea’s foreign minister says to talk to Blinken

—Reporting by Rajasik Mukherjee and Roushni Nair in Bengaluru; Editing by Saad Sayeed and Mrigank Dhaniwala