BENGALURU- The Indonesian rupiah was the biggest gainer among buoyant emerging Asia currencies on Friday as the dollar dipped ahead of Federal Reserve Chair Jerome Powell’s speech, which is expected to give cues on the timing and magnitude of a US rate cut.
The rupiah ended 0.87 percent higher, while stocks in Jakarta added 0.8 percent , as Southeast Asia’s largest economy shelved planned changes to electoral laws that could have weakened opponents of the outgoing president and his successor.
The market reacted positively to the parliament ditching its plans to revise the laws, said Fakhrul Fulvian, an economist of Trimegah Securities.
Most emerging Asian currencies and stocks rose ahead of Powell’s speech at the Jackson Hole symposium, which will be scrutinized for cues on the Fed’s monetary policy plans.
While the Fed is expected to all but cut rates in September, the markets are uncertain about the magnitude of the cut. Other global central banks tend to follow the Fed.
“With Fed rate cuts now seeming imminent, Asian currencies have finally snapped back into line with the narrowed yield gap since the start of the month,” analysts from Capital Economics wrote in a research note.
Thailand’s baht gained 0.7 percent on easing fears of political upheaval following the appointment of Paetongtarn Shinawatra as the country’s youngest prime minister.
Earlier this week, better-than-expected second-quarter growth also generated some confidence among investors.
“Looking at (the) macro, the baht is set to benefit from further normalization post-pandemic. GDP growth and current account may remain supported by export demand and tourism recovery,” said Jeff Ng, head of Asia Macro Strategy of Sumitomo Mitsui Banking.
The Singapore dollar gained 0.3 percent , while stocks traded 0.3 percent higher, as the city-state posted its lowest core inflation since February 2022.
Among Asian shares, Bangkok’s rose about 0.6 percent , while Seoul shares closed 0.2 percent lower.
Markets in the Philippines were closed due to a public holiday.
