Indonesian stocks and the rupiah fell on Friday as escalating political protests in Jakarta rattled investor confidence, while broader Asian markets were subdued ahead of a key U.S. inflation data that could signal Federal Reserve policy direction.
Tensions in Indonesia mounted on Friday, a day after a motorcycle rider died when he was hit by a police vehicle during violent clashes after a demonstration outside parliament over several issues, including lawmakers' pay and education funding.
The Jakarta Composite Index tumbled as much as 2.3% in early trading - its steepest intraday drop since June 23 - before paring losses to close down 1.3%.
The rupiah led regional currency declines, slumping 0.95% to 16,495 per dollar before recovering to trade 0.8% lower following suspected central bank intervention.
Bank Indonesia's monetary department head Erwin Gunawan Hutapea reiterated the central bank's commitment to market stability across offshore, onshore and spot markets.
Despite the selloff, Jakarta's benchmark remains up 3.8% this month after hitting a record high Thursday.
"After a strong rally since April, the recent protests are giving investors an excuse to take some profits," said Gary Tan, portfolio manager at Allspring Global Investments in Singapore.
Meanwhile, Thai shares fell 0.2% as the Constitutional Court prepared to decide Prime Minister Paetongtarn Shinawatra's fate in a dismissal case.
Other regional markets reflected cautious sentiment ahead of U.S. inflation data. South Korean shares and Philippine equities declined 0.4% and 0.6%, respectively, while Singapore and Taiwan bucked the trend with 0.4% gains each.
Currency markets showed broad risk-off sentiment. The Philippine peso and the South Korean won fell 0.4% each.
The Malaysian ringgit fell 0.2%, while the Singapore dollar and Taiwan dollar traded flat. The Indian rupee hit a record low.
The Philippines' central bank delivered an anticipated 25-basis-point rate cut on Thursday while signalling that its easing cycle may be complete.
The dollar index rose 0.2% on Friday but has weakened 2% this week as rising bets of Fed rate cuts have pressured the greenback.
Barclays' analysts noted that most Asian currencies have underperformed expectations, with several central banks intervening to limit gains.
The MSCI emerging market currency gauge gained 0.2% this week, while emerging Asian equities outside Japan traded flat.
HIGHLIGHTS:
** Philippines' trade deficit narrows in July
** Thailand has no plans to raise debt ceiling, finance minister says - Reuters
