JAKARTA (Reuters): In South-East Asia, the Indonesian rupiah weakened to levels near 16,900 against the dollar, extending losses for an eighth consecutive session.
Christopher Wong, currency strategist at OCBC, attributed the currency's weakness to risks of fiscal slippage and subdued foreign participation in the bond market, adding that "a clearer demonstration of fiscal prudence and policy continuity would help rebuild investor confidence."
Indonesia's unaudited 2025 budget deficit was one of the widest in more than two decades, near a legal cap, on weaker revenue and heavy stimulus as well as social-welfare spending, officials said last week.
Emerging Asia stocks, continued their uptrend on the back of tech-heavy stocks in South Korea and Taiwan, briefly pushing the MSCI EM Asia gauge to a record high.
Singapore's FTSE Straits Times index also traded at an all-time high in the afternoon. Elsewhere, Malaysian stocks rose as much as 0.6% to their highest point in nearly seven years, while stocks in the Philippines hovered around five-month highs.
South Korea's won tumbled to a three-week low on Tuesday, extending losses into a tenth consecutive session, as persistent retail outflows pressure the currency even as the government weighs stabilisation measures.
Most regional currencies also lost some ground, with the Thai baht slipping as much as 0.6% to 31.40 per dollar.
The South Korean won's decline comes even after sources told Reuters that the government is likely to issue foreign exchange stabilisation bonds as early as January to bolster reserves.
Mitul Kotecha, head of FX & EM macro strategy for Asia at Barclays in Singapore, attributed the won's weakness to persistent retail outflows, while stating that the market did not consider announced measures enough to prevent depreciation.
Retail investors have withdrawn 350.82 billion won ($238.07 million) from equity markets so far in January, extending outflows of about 9 trillion won in December and a total of 26.37 trillion won in 2025, exchange data showed.
Authorities also summoned seven local banks on Monday to review a jump in U.S.-dollar deposits amid won weakness, while policymakers last week pledged to steady the currency and said the recent drop was out of line with fundamentals.
South Korea's KOSPI index and Taiwan's benchmark gauge ended the day at a record peak on AI-driven optimism.
Market focus now turns to the Bank of Korea's interest rate decision on Thursday, with a Reuters poll of economists expecting the central bank to keep its key interest rate unchanged at 2.50%. -- Reuters
