Asian currencies, equities jump on soft US data; Indonesian rupiah leads gains

• Indonesian rupiah top gainer
• Malaysian ringgit up 0.5%
• Bangkok stocks gain 0.4%

Most Asian currencies and equities rallied on Wednesday after soft U.S. producer prices data stirred hopes of benign consumer price inflation, with the Indonesian rupiah and Malaysian ringgit leading gains in the region.

The Indonesian rupiah appreciated 1% against the greenback to hit its highest level since March 21, while local equities jumped 0.8%.

Indonesian government’s revenue stabilized in July, the finance minister said on Tuesday, amid higher spending, including for a new capital named Nusantara that is expected to potentially attract investor interest.

Analysts also expect Bank Indonesia (BI) to cut interest rates at its next policy meeting.

“In addition to the rupiah staying well ​behaved, BI may also need greater confidence that Federal Reserve easing is at hand before starting its own cuts,” said Barclays analysts.

The Malaysian ringgit closely followed the rupiah’s lead and gained 0.5%. Equities<.KLSE> were flat.

The country’s economy likely grew at its fastest pace in 18 months in the second quarter on a strong rebound in exports and higher household consumption, according to a Reuters poll.

Malaysia’s gross domestic product data is due on Friday.

Other stock markets in emerging Asia rose, with the exception of China and Malaysia, ahead of key inflation numbers from the U.S. that could add to expectations for a September rate cut.

Equities in Singapore <.STI> and Philippines <.PSI> gained 0.4% and 0.6%, respectively.

Currencies in the region were mostly upbeat with both the Taiwan dollar and the South Korean won appreciating 0.5%.

Stocks in Bangkok <.SETI> surged 0.4% and the Thai baht =TH> was last up 0.2% against the U.S. dollar, which remained on the back foot after softer U.S. producer prices reinforced bets on Federal Reserve interest rate cuts this year.

A Thai court is expected to rule later in the day on whether Prime Minister Srettha could be dismissed after less than a year in office by deciding if he violated “ethical standards” by appointing previously jailed Pichit Chuenban to cabinet.

“If the PM survives the case, it could be quite positive for Thai assets as it could mean subsided political uncertainty,” Poon Panichpibool, a markets strategist at Krung Thai Bank, said, pointing to the turmoil in Southeast Asia’s second-largest economy.

HIGHLIGHTS:

** Indonesia’s July trade surplus expected to rise to $2.45 bln, Reuters poll shows

** Japan’s Prime Minister Kishida to resign, paving way for new leader

** Singapore’s Olam Group logs marginal rise in profit despite higher costs

 —Reporting by Sherin Sunny and Echha Jain in Bengaluru; Editing by Kim Coghill and Janane Venkatraman