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Indonesia’s rupiah firmed to a four-month high on Tuesday amid tepid gains in emerging Asian currencies due to a weaker US dollar, with trading in the region largely subdued due to the Lunar New Year holiday.

The rupiah strengthened as much as 1.1% against the dollar to hit its highest since Sept. 16, and was headed to test 14,975 to 15,000 per dollar.

“A combination of better risk sentiment and bond inflows are supporting the IDR rally,” said Alex Loo, a global strategist at TD Securities.

The dollar index was on the back foot in Asian trading as traders continued to gauge the risks of a US recession and the path for Federal Reserve policy.

The Japanese yen rose 0.3%.

The Indian rupee slipped 0.3% while Thailand’s baht was down 0.2%.

Thailand’s central bank is expected to raise interest rates by 25 basis points on Wednesday to curb elevated inflation, according to a Reuters poll. Its stocks were up marginally, by 0.2%.

Emerging Asian FX mixed on rate hike, recession woes; ringgit, baht gain

More central banks in Asia dialled back their policy tightening narrative last week, with Malaysia central bank’s unexpectedly pausing and Indonesia signalling an early end to its cycle.

Meanwhile, China kept benchmark lending rates unchanged for a fifth month on Friday, as expected, but analysts say future cuts are possible, because the central bank has pledged to support the COVID-ravaged economy.

Most Asian markets remained close for Lunar New Year celebrations, including mainland China, Singapore, South Korea and Malaysia.

“Markets are probably more quiet as people are more cautious, given the looming Fed FOMC meeting. Fed officials have officially entered in a communication blackout,” Loo added.

Still, risk sentiment was buoyed by an overnight rally in US tech stocks and by broader optimism over China’s recovery following the abrupt end of its zero-COVID policy.

Shares rose 0.5% in the Philippines, 0.4% in India and 0.4% in Jakarta.

Highlights:

** Indonesia’s 10-year Treasury yield touched its lowest since March 4

** Japan’s manufacturing activity contracted for a third straight month in January as export weakness persisted amid a worsening global outlook, a corporate survey showed on Tuesday

** Investors await US flash PMI data on Tuesday, Fed seen raising rates by 25 basis points on Feb. 1

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