Indonesia's currency was pinned at a more-than-three-month low on Thursday, as investors put further pressure after its central bank stayed pat on interest rates a day earlier and hinted at focusing on strengthening the rupiah leading to fewer chances of policy easing.
The Indonesian rupiah dropped up to 0.6% against the U.S. dollar, hitting its lowest since mid-August. Stocks in Jakarta gained as much as 0.4%.
The U.S. dollar strengthened due to a boost in fund flows.
Bank Indonesia on Wednesday kept its key benchmark interest rate on hold for the second month in row after a surprise cut in September, adding that focus would now remain directed towards making the currency stronger and stable against global economic and geopolitical uncertainties.
"We believe Bank Indonesia will be compelled to maintain a pro-stability stance next year, with rupiah stability remaining a key focus," said analysts at Mandiri Sekuritas.
Indonesia's neighbour, Singapore is expected to announce final numbers for third-quarter growth on Friday. Investors expressed their caution ahead of the key economic news item, with the local dollar and shares both trading more or less flat.
The Monetary Authority of Singapore (MAS) stood pat in October.
"Our economists’ base case is for a Jan 25 easing, although easing could be delayed if inflation is sticky and/or growth remains robust," said analysts at Maybank.
Among other Asian currency markets, the Taiwan dollar and Thailand baht dropped 0.2% and 0.1%, respectively, while the Malaysian ringgit added 0.1%.
Stock markets in Asia were mostly downbeat as escalating tensions between Russia and the West forced investors away from risky emerging assets.
Stock markets in Thailand and Philippines led the losses, dropping 1.1% and 1.6%, respectively.
Thailand's non-performing loans (NPL) edged up to 2.9% for the third quarter from 2.8% in the previous three months.
Analysts say the country's NPL going higher reflects weak economic conditions and a tight monetary policy.
"The risk of a negative feedback loop forming between credit quality and economic growth is rising, with worsening NPLs leading to stricter loan approvals," said Nomura analysts.
Shares in Mumbai fell 0.7%, dragged down by a plunge in Adani group company stocks after U.S. authorities indicted Chairman Gautam Adani over his role in a $265 million bribery scheme.
HIGHLIGHTS
** Indonesia, Brazil companies sign broad MoU worth $2.8 bln, govt says
** Indonesian central bank says will ensure balance in FX market
** Thai economy to grow 2.7% this year, to beat forecast in 2025, PM says - Reuters
