Indonesia's rupiah touched a two-week high on Tuesday with some expectations that its central bank may raise interest rates a day after President Joko Widodo announced a long-awaited increase in subsidised fuel prices. The government is expected to save up to 140 trillion rupiah ($11.5 billion) next year after the fuel price hike, Finance Minister Bambang Brodjonegoro said.
The increases of more than 30 percent is also seen helping bring down both the fiscal and current account deficits. The rupiah earlier rose as much as 0.8 percent to 12,100 per dollar, its strongest since November 5. The 10-year government bond yield fell to as low as 7.886 percent, its lowest since September 15. Jakarta shares ended up nearly 1 percent at 5,102.47, an intraday high and the highest close since October 23.
The Indonesian currency pared some of its earlier gains as economists were split over whether the central bank would raise interest rates, a move that could dampen economic growth. Most other emerging Asian currencies slid, led by the South Korean won as the yen eased amid expectations of Japan's snap election and a delay in sales tax hike.
The won fell on growing caution over possible intervention by South Korea's foreign exchange authorities to check the currency's strength against the yen. Malaysia's ringgit eased 0.2 percent to 3.3540 per dollar, its weakest since May 2010. The currency broadly dipped in the non-deliverable forwards markets.
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