July 15, 2020 / 5:13 AM / a month ago

EMERGING MARKETS-Rupiah under pressure as investors brace for a rate cut

    * Graphic: World FX rates tmsnrt.rs/2egbfVh
    * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA
    * Bank Indonesia seen making its fourth rate cut this year
    * Philippine stocks fall to an over 2-week low 

    By Shriya Ramakrishnan
    July 15 (Reuters) - The Indonesian rupiah fell on Wednesday
as the prospect of a fourth central bank interest rate cut this
year dented the appeal of one of Asia's highest-yielding
currencies while surging coronavirus cases spurred more selling
in the Philippines. 
    The rupiah lost nearly 1% to 14,500 per dollar, its
worst intraday percentage drop in nearly two weeks, while shares
in Jakarta edged up 0.2% as stocks across Asia gained on
hopes for a swift launch of coronavirus vaccines this year.
    A slim majority of analysts polled by Reuters expect Bank
Indonesia (BI) on Thursday to cut its main rate by 25 basis
points to 4.00% as inflation and growth slow in one of the
economies hardest hit by the virus.
    Other analysts believe, however, that BI could be deterred
from cutting now due to a 3% weakening of the rupiah in the past
month that could spur unwanted inflation, but Finance Minister
Sri Mulyani Indrawati said last week price growth would remain
anchored between roughly 2% and 4% this year.
    The meeting also follows a series of other moves across the
region and the launch by Indonesia last week of a $40 billion
financing scheme, including billions in central bank
bond-buying, to help prop up businesses and infrastructure.
    "There is actually more-than-ample room for BI to lower its
benchmark rate by another 25 bps," said Anthony Kevin, an
economist at Mirae Asset Indonesia. 
    "BI has only executed benchmark rate cuts of 75 bps, way
below the Fed's 150-bps cuts and also below other central
banks."  
    Manila's stock market, which has largely
underperformed peers this year, fell another 2% to a more than
two-week low, while the peso eased slightly as concern
over the Philippines' coronavirus outbreak continued to grow.
    While Tuesday saw the lowest daily increase in new cases in
nearly two weeks, critical care facilities in Manila hospitals
are reaching full capacity due to a recent spike in infections
and investors assume more restrictions, and economic pain, will
follow.
    Local media speculated President Rodrigo Duterte would
announce new community quarantine classifications for different
cities in the country later on Wednesday. 
    Singapore shares staged a sharp rebound, rising
nearly 1% after three consecutive days of declines and the shock
of data showing a 41% contraction in the economy last quarter. 
    "The Singapore market is undervalued and investors are
perhaps looking for bargain hunting opportunities," said
Margaret Yang, a strategist at DailyFX. 
    "But trading volumes aren't impressive. ..we need to see
institutional capital flowing back to the market before we can
have a sustained rally." 
    
    HIGHLIGHTS:
    
    ** In the Philippines, top index losers are Bloomberry
Resorts Corp down 6.04% at 7.15 peso; GT Capital
Holdings Inc down 5.31% at 1310 peso; PLDT Inc
 down 5.07% at 428 peso
    ** Top gainers on the Singapore STI include SATS Ltd
 up 3.65% at S$2.84, City Developments Ltd up
2.42% at S$8.47, UOL Group Ltd up ​ 2.22% at S$6.9
    ** Indonesian 10-year benchmark yields are up 2.3 basis
points at 7.105%
    
    
  Asia stock indexes and                                     
 currencies at   0400 GMT                               
 COUNTRY   FX RIC          FX  FX YTD    INDEX  STOCKS  STOCK
                      DAILY %       %            DAILY  S YTD
                                                     %      %
 Japan                  -0.03   +1.26             1.13  -3.44
 China     <CNY=CFXS    +0.07   -0.56            -1.39  10.40
           >                                            
 India                   0.00   -5.35             0.88  -12.0
                                                            6
 Indonesi               -0.86   -4.28             0.24  -19.1
 a                                                          8
 Malaysia               +0.12   -4.08            -0.19   0.43
 Philippi               -0.08   +2.40            -2.30  -22.8
 nes                                                        3
 S.Korea   <KRW=KFTC    +0.30   -3.80             0.42  -0.23
           >                                            
 Singapor               +0.06   -3.35             0.98  -17.9
 e                                                          0
 Taiwan                 +0.41   +2.15             0.27   2.04
 Thailand               +0.19   -5.08             0.38  -14.7
                                                            9
 
    
    

    




 (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by
Simon Cameron-Moore)
  
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