Indonesia’s rupiah led emerging Asian currencies higher on Wednesday, while equities in the region were mixed, as investors awaited this week’s US inflation data for possible clues on the Federal Reserve’s monetary policy tightening.

The rupiah firmed 0.5%, while the Singaporean dollar and the Indian rupee firmed 0.1%.

The positive sentiment around Asian currencies, which have benefitted from the dollar weakening and China’s borders reopening, has not changed, said Mitul Kotecha, head of emerging markets strategy at TD Securities.

“But they continue to fight against continually hawkish rhetoric from the Fed.”

Fed Chair Jerome Powell did not give any policy clues during a panel discussion in Stockholm overnight. Markets have been hoping that the Fed could soon signal an end to its rate hike cycle, following recent signs of a slowdown in the US economy.

Investor attention is now on the US consumer price index data, due on Thursday.

“Another deceleration in price pressures would add to speculations that the Fed could again cut back on its pace of hike to 25 basis points (bps). This can support risk sentiment while the USD could come under renewed pressure,” OCBC analysts said in a note.

Optimism around China’s re-opening has lifted Asian currencies against the dollar, with the Thai baht rising 3.4% since the start of the year and outperforming all regional peers.

“We are likely to see continuous improvement in its (Thailand’s) services exports and consequently a stronger THB this year,” analysts at UOB wrote.

China’s yuan, which has jumped roughly 1.8% against the dollar so far this year, was up 0.1%.

Asian currencies, stocks rise on hopes of slowdown in Fed hikes, China reopening

Equities in the region were mixed. Stocks in Thailand and the Philippines retreated 0.3% and 0.5%, respectively, while those in Singapore advanced 0.3%.

Stocks in Jakarta pared some losses after falling as much as 1% earlier in the session to touch their lowest level since May. Indonesian equities, which rose about 4% in 2022, have reversed most of their gains so far this year.

“The sell-off has mostly happened on big banks and other stocks, which saw heavy flows from foreign investors last year,” said Fakhrul Fulvian, an economist at Trimegah Securities.

Indonesia’s relative outperformance last year, which resulted in expensive valuations, and China’s reopening now have led to a global fund rebalancing, he added.

Highlights

** Top losers on the Jakarta stock index include Garda Tujuh Buana Tbk PT and Sunson Textile Manufacturer Tbk PT

** Malaysia’s industrial production in November rose 4.8% from a year earlier, above expectations

** Brazil’s real rose 1% on Tuesday after a day of volatility driven by uncertainty as supporters of far-right former President Jair Bolsonaro stormed the capital