JAKARTA (Reuters):The Singapore dollar gained ground after an unexpected policy tightening on Monday, while the Indonesian rupiah weakened to briefly touch the key 18,000-per-dollar mark after its central bank chief announced a surprise retirement.
Emerging Asian equities advanced in the afternoon trade as crude prices tumbled after U.S.-Iran hostilities paused over the weekend. The MSCI EM Asia equities gauge rose nearly 1%, with stocks in South Korea and Taiwan climbing as much as 2%.
Singapore's central bank unexpectedly raised the prevailing rate of appreciation of its exchange-rate-based policy band slightly, citing inflationary risks from the Middle East conflict.
That sent the Singapore dollar to seven-session highs against the U.S. dollar and the Chinese yuan and a one-month high against the Malaysian ringgit.
Equities in Singapore rose, with the benchmark FTSE Straits Times advancing to a record high with heavyweight banks - DBS Group, OCBC and United Overseas Bank - rising between 0.4% and 0.6%.
In Shanghai, chipmaker CXMT Corp surged more than six-fold on its debut to become China's most valuable listed company, surpassing lender ICBC.
Meanwhile, the Indonesian rupiah briefly fell to the crucial 18,000-per-U.S.-dollar level for the first time in seven sessions, while stocks also slipped.
The moves came after Indonesia's central bank governor, Perry Warjiyo, stepped down with analysts warning the unexpected change could rattle investors worried about the central bank's independence and the country's fiscal management.
Globally, hopes for a diplomatic end to the Middle East crisis grew as hostilities paused, offering a potential reprieve from elevated energy costs.
Oil slipped to as low as $89.58 a barrel, while the U.S. dollar and Treasury yields also crept lower.
"The equity picture tells the same cautious story. Asian markets are signalling that this is not a true risk-on move - it’s a relief rally that investors still don’t fully trust," said Dilin Wu, research strategist at Pepperstone.
"Japan, Korea, Taiwan, India all run heavy energy import bills - a durable peace deal eases current account pressure, cools inflation, and removes the need to defend currencies against dollar strength simultaneously."
Lingering AI-related concerns kept equities in South Korea and Taiwan in check. Stocks in Seoul shed nearly 2% last week on renewed fears that slow returns on massive U.S. tech AI investments could weaken demand for memory chips, with excessive volatility from investment in leveraged ETFs further weighing on chip stocks. -- Reuters
