Asian currencies fell on Tuesday, led by the Malaysian ringgit and Indonesian rupiah, as dollar strength persisted following US President-elect Donald Trump’s tariff threats, while regional stocks rallied on Wall Street’s tech performance.
The rupiah was down as much as 0.4% to 15,958 dollar, as of 0339 GMT, its steepest fall since mid-August, while the ringgit weakened 0.3% to its lowest level since Nov. 22.
Trump’s tariff threat last week on China, Southeast Asia’s largest trading partner, had left investors rattled, driving them away from riskier Asian assets and towards the safety of the dollar.
Federal Reserve Governor Christopher Waller signalled his inclination to support another interest rate cut this month given the projected decline in inflation to 2%, boosting market expectations of a rate cut to 73%.
The dollar index, which tracks the greenback against six major currencies, edged up 0.2% to 106.53, reflecting a nearly 6% increase since early October, when Trump’s re-election prospects began influencing markets.
The headline inflation in Indonesia eased in November, providing room for the central bank to consider cutting its policy rates.
Bank Indonesia (BI) cut interest rates in September, just ahead of the US Federal Reserve starting its easing cycle, but since then has held its key rate at 6%.
“In countries such as Indonesia, priority has been placed on currency stability and rate cuts have been postponed despite an economic slowdown, which could have negative impact on the domestic economy,” said Ryota Abe, an economist at SMBC.
Asian currencies: Indonesian rupiah leads losses among Asian FX
Analysts are closely monitoring inflation data across Asia this week, with South Korea’s November inflation coming in below expectations, following Indonesia’s release on Monday and upcoming reports from the Philippines, Taiwan, and Thailand.
Equities in the region rallied, with technology stocks leading the charge.
Shares in Taiwan, South Korean , Japan and Indonesia climbed more than 1% each, taking their cues from record highs hit on Wall Street overnight.
Shares in Singapore rose as much as 1.3%, touching their highest levels since early November 2007.
MSCI’s broadest index of Asia-Pacific shares added over 1%, marking its steepest rise since Nov. 12.
Among other Asian currencies, the Thai baht was the only outlier, rising 0.2%.
Traders reacted to Finance Minister Pichai Chunhavajira’s statement suggesting further rate cuts due to low inflation, ahead of the next policy review on Dec. 18.