Indonesia's rupiah stayed near historic lows and Jakarta equities were headed for their steepest weekly drop since the pandemic on Friday, as investors fretted over policy direction following an outsized rate hike.
The rupiah weakened about 0.5% to 17,720 per dollar by 0654 GMT, hovering near the record low of 17,745 touched earlier this week. The currency has lost nearly 6% this year, making it one of Asia's worst performers, as higher oil prices, elevated U.S. yields and a stronger dollar pressure import-heavy economies.
Bank Indonesia surprised markets with a 50-basis-point rate hike this week to support the rupiah, even as inflation remains contained. The government also unveiled an ambitious plan to centralise exports of key commodities.
"The high yield environment globally is generally not good for IDR," Jain said, adding that markets could test BI at future meetings by pushing dollar/rupiah and bond yields higher.
Jakarta shares edged up 0.4% on the day, suggesting some bargain-hunting after a bruising selloff, but the benchmark remained on course for its steepest weekly fall since March 2020.
The index fell for eight straight sessions through Thursday, shedding more than 15% over that stretch. It is down about 29% this year.
Much of the recent equity-market anxiety has centred on plans to tighten control over coal and other commodity exports, raising fears of sales disruptions, tighter curbs on private firms and weaker earnings visibility in a key FX sector.
Efforts to curb export value manipulation, including mis-invoicing and illegal mining practices, would be positive for Indonesia in the long run, but private firms may see the tighter rules as negative, said Chandresh Jain, emerging market Asia rates and FX strategist at BNP Paribas.
The Indian rupee was little changed after a run of record lows, with traders citing likely dollar-selling intervention by the Reserve Bank of India.
Elsewhere in Asia, the South Korean won weakened 0.6% to 1,517 per dollar and is down over 5% this year.
The Philippine peso was flat and has lost nearly 5% this year, with inflation concerns keeping policy tightening expectations alive.
Turkish assets fell after a court annulled the Republican People's Party's 2023 congress that brought Chairman Ozgur Ozel to power, heightening concerns over political stability.
The BIST 100 index snapped four sessions of losses to rise 1.5% on Friday; it had dropped 6% in the previous session, triggering a circuit breaker. The lira was little changed on the day, last down 0.2%.
In equities, Taiwan stocks rose over 2% on Nvidia-driven gains, while South Korean shares added 0.4%. Bourses in China, Manila, Kuala Lumpur and Singapore also advanced.
HIGHLIGHTS:
** Indonesia finmin tells forex players to dump dollars
** Indonesia's Q1 current account deficit at 1.09% of GDP
** India not in favour of rate hikes to defend rupee - Reuters
