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EMERGING MARKETS-Indonesia's rupiah drops, shares rise after rate cut

Published 19-11-2020, 02:03 pm
© Reuters.
USD/JPY
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USD/SGD
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JP225
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USD/IDR
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USD/MYR
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USD/PHP
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PFE
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NSEI
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JKSE
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KLSE
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ID10YT=RR
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KS11
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TWII
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SSEC
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PUBM
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HLBB
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SETI
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PSI
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STI
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MRNA
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* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

* Bank Indonesia cuts rates by 25 bps

* Rupiah down 0.7%

* Philippine central bank cuts rates by 25 bps

* South Korea, Thai central bank intervene to stem currency gains

Nov 19 (Reuters) - Indonesia's rupiah fell more than half a percent and shares gained as the country's central bank cut rates to support its economic recovery, while Asian stock markets struggled for traction on rising COVID-19 cases and restrictions.

Singapore .STI and South Korea .KS11 pared losses over the day, although Asia's emerging markets drifted as the world struggles to keep a lid on infections.

Bank Indonesia (BI) cut its seven-day reverse repurchase rate IDCBRR=ECI by 25 basis points to 3.75%, the lowest since BI began using the instrument as its benchmark in 2016, defying a majority of economists who predicted no change in policy. markets were divided through the morning leading up to the central bank's decision, on expectations that BI may look to stem the rupiah's IDR= recent strong gains over November to support the economy out of a recession.

"Our forecast is that the rupiah will stabilise over the coming months, helped by a shrinking current account deficit, low inflation and an improvement in global risk appetite," Capital Economics, who predicted a cut, said in a note after the decision.

Indonesia's high-yielding debt is a favourite of foreign investors. The yield on the benchmark 10-year bonds ID10YT=RR was unmoved after the decision.

The Philippine central bank unexpectedly cut its policy rates by 25 basis points to guide the country's economy through the coronavirus crisis. peso PHP= closed slightly lower, and stocks in Manila .PSI tracked the broader fall in risk appetite.

Broadly, currencies in the region were weaker. South Korea's won KRW=KFTC slid 1% after dealers told Reuters the central bank was suspected of buying dollars on Thursday to stem gains. from Wednesday's warning of the Thai baht's THB=T strength and its impact on exports, the central bank said it had intervened in the market. The currency dipped 0.2%. vaccine news from Pfizer (NYSE:PFE) PFE.N and Moderna MRNA.O , while triggering initial market boosts, have done little to assuage investors' concerns that the new wave of COVID-19 cases would dent any momentum for a global economic recovery.

DBS analysts said emerging Asian currencies are unlikely to be spared from traders looking to cover their shorts, as "investors have found it increasingly difficult to extend the euphoria from the US elections and vaccine hopes."

HIGHLIGHTS:

** Indonesian 3-year benchmark yields fell 1.7 basis points to 4.908%

** Hong Leong Bank Bhd HLBB.KL and Public Bank Bhd PUBM.KL led losses in Malaysian financials

** Tokyo raises coronavirus alert for infections to highest level stock indexes and currencies at 0740 GMT COUNTRY

FX RIC

FX

FX

INDEX

STOCKS STOCKS

DAILY % YTD %

DAILY % YTD % Japan

JPY=

+0.01

+4.61

.N225 -0.36

8.36 China

CNY=CFXS -0.20

+5.95

.SSEC 0.47

10.26 India

INR=IN

-0.10

-3.89

.NSEI -0.08

6.24 Indonesia

IDR=

-0.71

-1.91

.JKSE 0.54

-11.30 Malaysia

MYR=

-0.18

-0.09

.KLSE -1.11

-0.11 Philippines PHP=

-0.09

+4.90

.PSI

-0.77

-10.46 S.Korea

KRW=KFTC -1.06

+3.66

.KS11 0.07

15.91 Singapore

SGD=

-0.16

+0.03

.STI

0.01

-13.47 Taiwan

TWD=TP

+0.89

+5.62

.TWII -0.37

14.38 Thailand

THB=TH

-0.20

-1.48

.SETI 0.53

-13.17

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