Emerging markets: Indonesia's rupiah firm after central bank holds rates and stocks pare losses


JAKARTA, Oct 19 (Reuters): Indonesia's rupiah remained firm on Tuesday after the country's central bank held interest rates steady as expected, while other Asian currencies basked in the dollar's decline that was prompted by weak US data and improving risk sentiment.

Leading gains, the South Korean won surged 0.8% and the Thai baht rose 0.6%, while the Philippine peso, the Singapore dollar, and Taiwan's dollar also strengthened.

The dollar index, which measures the greenback against six peers, fell to a three-week low after data showed US factory output in September slowed, while signs that China's property woes could be contained boosted risk assets.

The rupiah was up 0.3% at 14,070 per dollar as Bank Indonesia (BI) kept its benchmark rate at a record low of 3.50% to support economic recovery and maintained its growth outlook.

BI's policies to prioritise macroeconomic stability through a harsh Covid-19 wave have worked well so far, with rupiah being the best performer in the third-quarter among Asian currencies.

"The government's focus on tax reforms and re-opening the economy to tourism has also boosted policy credibility and brightened recovery prospects," Mizuho analysts said in a note.

"Substitution of Australian coal for Indonesian coal by China is adding to rupiah's allure at the margin," they added, as the country is a net commodity exporter.

Jakarta shares pared losses to trade flat following the decision, after having retreated from hitting a record high. Stocks had been gaining for six straight sessions.

The mood was also upbeat because of a tech-fuelled rally on Wall Street overnight, with a rebound in Chinese markets anchoring gains in Asia a day after weak data stoked investor concerns about the world's second-largest economy.

Philippine stocks jumped as much as 1%, bolstered by AC Energy Corp rallying 10% on approving a number of deals that would see the power generator stop using thermal coal by 2025.

Shanghai stocks pushed higher, while the Chinese yuan climbed 0.5% to 6.40, blowing past a level it last hit in mid-June.

Markets were still watching out for any announcement from debt-laden developer China Evergrande Group as it approached the end of a 30-day grace period for a missed coupon payment that had been due on Sept. 23. - Reuters

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