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Philippine peso hovers near 16-1/2-yr low, Indonesian rupiah steady



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The Indonesian rupiah held steady on

Thursday after the country’s central bank left interest rates at

a record low, while the Philippine peso hovered near its lowest

level in 16-1/2 years following a 25-basis-point rate hike.

The rupiah was 0.2% higher, clinging to its earlier

levels after Bank Indonesia (BI) acted as widely expected,

balancing the need to support economic growth while maintaining

stability in the currency.

The BI’s decision will put further pressure on the currency,

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said Fakhrul Fulvian, an economist at Trimegah Securities.

“Stability in IDR can only be achieved once BI clearly

states its intention to start the tightening cycle seriously,”

he said.

“Commodity windfall, rupiah’s relative outperformance as

well as a higher subsidy budget have provided room for the BI to

bide time and not join regional peers, for instance the

Philippines, in tightening policy reins,” said Radhika Rao,

senior economist at DBS Bank.

Meanwhile, the Philippine central bank turned more hawkish,

pledging to take “all necessary policy actions” to stamp down

inflation, which is running at a more than three-year high.

The peso dropped as much as 0.6% after the rate

decision, even as investors weighed the modest hike against a

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higher inflation forecast by the central bank.

Bangko Sentral ng Pilipinas (BSP) incoming Governor Felipe

Medalla had said he aimed to raise rates at a measured pace

beyond August.

“We continue to expect the BSP to tighten another 150bp in

this hiking cycle with a cumulative 100bp hikes this year and

50bp in Q1 2023 bringing the policy rate to a terminal rate of

4%,” Goldman Sachs analysts said.

Emerging Asian central banks have tried to keep pace with

the recent tightening by the U.S. Federal Reserve, but have

fallen behind the curve as concerns around the economic pain

associated with aggressive rate hikes abound.

Among other regional currencies, the South Korean won

and the Thai baht slipped 0.3% each while

the Malaysian ringgit was flat.

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The Singaporean dollar weakened 0.3% after its

inflation reading came in at a more than 10-year high,

increasing the odds of a further inter-cycle tightening in


“We note the risk of an earlier-than-expected inter-meeting

move, our base case remains for the Monetary Authority of

Singapore to further tighten FX policy in October with a 50bp

slope increase,” Barclays analysts said in a note.

The Indian rupee pared early gains to trade flat.

Global risk sentiment remained fragile after Fed chairman

Jerome Powell pledged full commitment to bring prices under

control, despite the risks of an economic downturn. Markets are

pricing in another 75-basis-point increase in July.

“Ahead, a series of purchasing managers index (PMI) readings

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from major economies will be on close watch to provide fresh

update on economic conditions,” Yeap Jun Rong, market strategist

at IG, said in a note.

Equity markets wobbled, with shares in Philippines

down 1.7%, Taiwan shares and South Korea losing

more than 1% each.

Jakarta shares reversed course to gain 0.2% after

the rate decision, while those of India and Singapore

rose 0.4% and 0.3%, respectively.


** Thailand’s inflation will remain elevated this year, but

should fall back into the central bank’s target range of 1% to

3% in the second quarter of next year, a bank official said on


** Indonesian 10-year benchmark yields are down 5.7 basis

points at 7.437%​​.

** Singapore’s 10-year benchmark yield is down 4.7 basis

points at 2.98%.​​

Asia stock indexes and currencies

at 0815 GMT



% %

Japan +0.47 -15.1 0.08 -9.10



India +0.04 -5.14 -0.14 -11.3


Indonesia +0.20 -3.94 0.20 6.33

Malaysia -0.05 -5.47 -0.07 -8.77

Philippines -0.57 -6.73 -1.67 -14.8


S.Korea 8

Singapore -0.24 -2.96 0.21 -0.77

Taiwan +0.03 -7.02 -1.12 -16.7


Thailand -0.39 -5.88 0.12 -5.77

(Reporting by Savyata Mishra in Bengaluru; Editing by Sherry




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(604) 684-1099

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