EMERGING MARKETS-Indonesia rupiah steady, stocks fall after c.bank rate cut, GDP downgrade

  • Reuters
  • Stock Market News
EMERGING MARKETS-Indonesia rupiah steady, stocks fall after c.bank rate cut, GDP downgrade
Credit: © Reuters.

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

* Indonesia cenbank also cuts lending facility rate

* Do not see scope for another rate cut by BI going forward - analysts

* SingTel shares drop on data breach

By Anushka Trivedi

Feb 18 (Reuters) - The Indonesian rupiah was little changed while stocks declined after the country's central bank cut interest rates by 25 basis points, as expected, and downgraded the economic growth outlook for 2021.

Bank Indonesia (BI) slashed the benchmark rate to 3.50%, its sixth since the start of the pandemic, but saw "limited" room for any more cuts even as it acknowledged the weakness in policy transmission since loans have struggled to pick up. IDR= was flat in the run up to the decision after weakening 0.7% over the past two sessions, while stocks .JKSE fell 0.4%, retreating from a 0.9% jump in the morning trade.

BI also trimmed the lending facility rate and relaxed some borrowing rules as it now forecasts slower economic growth in 2021 due to the harsh second wave of COVID-19 infections, but banked on vaccines to drive a rebound.

"While a relatively stable currency in general helped BI to opt for a cut, it needs to be remembered that weak economic activity is the prime reason for Indonesia's healthy current account balance," said Kunal Kundu, an economist at Societe Generale (PA: SOGN ).

"Going forward, we do not see any further scope of rate cut by BI unless the COVID-19 situation worsens even further."

The central bank signalled it would use other means to provide monetary help, including continuing to buy government bonds, which BNP Paribas (PA: BNPP )' head of ASEAN Economics Arup Raha saw as vital if done in tandem with fiscal support.

Indonesia financed its 2020 fiscal deficit and COVID-19 stimulus by raising debt, a good portion of which was bought by the central bank.

Other currencies in the region eased as the dollar =USD firmed on signs of a pickup in the U.S. economy. The Malaysian ringgit MYR=MY , the Thai baht THB=TH and the Philippine peso PHP= all fell around 0.2%.

Most Asian stocks were also downbeat, with the Straits Times Index .STI slipping 0.5% after Singapore Telecommunications STEL.SI slumped on reporting a privacy breach, which led to data of some consumers being stolen. Indonesia c. bank says rupiah has room to strengthen, is fundamentally undervalued

** South Korea stocks .KS11 slid 1.5% to a one-week low on continuing jump in coronavirus cases

** JGS Summit JGS.PS and Aboitiz Equity AEV.PS are top losers on the Philippine index .PSI

Asia stock indexes and currencies at

0817 GMT

COUNTRY

FX RIC

FX DAILY % FX YTD %

INDEX STOCKS DAILY % STOCKS YTD % Japan

JPY=

+0.02

-2.45 .N225

-0.19

10.17 China

CNY=CFXS

-0.20

+0.89 .SSEC

0.55

5.82 India

INR=IN

-0.01

+0.44 .NSEI

-0.74

7.98 Indonesia

IDR=

+0.00

+0.21 .JKSE

-0.44

3.70 Malaysia

MYR=

-0.15

-0.57 .KLSE

-0.64

-2.59 Philippines

PHP=

-0.23

-1.01 .PSI

-1.68

-4.06 S.Korea

KRW=KFTC

-0.01

-1.93 .KS11

-1.50

7.42 Singapore

SGD=

+0.01

-0.56 .STI

-0.54

2.14 Taiwan

TWD=TP

+0.18

+0.54 .TWII

0.38

11.48 Thailand

THB=TH

-0.10

-0.17 .SETI

0.11

4.64

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