The Indonesian rupiah hit a one-month high versus the dollar on Tuesday, building on the momentum it gained after breaching key technical resistance earlier this week. The rupiah has risen for four straight days, gaining some respite after the US Federal Reserve's interest rate hike late last week was accompanied by an assurance that further monetary tightening would be gradual.
Currencies such as the rupiah and the Malaysian ringgit are probably being supported by short-covering, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo. "However, I don't think these moves should be taken as an indication of how the market is likely to move from January onwards," Murata said, adding that there were still risks such as concerns about China's economic slowdown and the outlook for oil prices.
The rupiah last stood at 13,660 against the dollar, up 0.7 percent on the day. Earlier on Tuesday, it touched a high of 13,530, matching a peak reached on November 11 according to Thomson Reuters data. Two market participants said they suspected that there may have been some dollar-selling by Indonesia's central bank in the past few days, adding to the recent firmness in the rupiah.
The rupiah's rise picked up momentum after the dollar on Monday fell below its 100-day moving average at 13,915. The dollar's drop against the rupiah on Tuesday stalled near technical support for the greenback in the 13,540 to 13,550 area, which includes the dollar's 200-day moving average, now at 13,549. China's central bank set a slightly stronger midpoint for the yuan on Tuesday after Beijing pledged more policies and reforms in 2016 to support a slowing economy.
The People's Bank of China set the yuan/dollar midpoint rate at 6.4746 per dollar prior to market open, slightly firmer than the previous fix of 6.4753. In the onshore spot market, the yuan stood at 6.4787 , slightly firmer from the previous day's close of 6.4808 versus the dollar.