*
South Korea holds rates at 3.00%
*
Korean stocks at near 1-week high
*
Rupiah slips to 6-month low
By Sneha Kumar and Sameer Manekar
Jan 16 (Reuters) - The Indonesian rupiah hit a more than
six-month low on Thursday while the South Korean won snapped a
three-day winning streak after both countries' central banks
shocked investors by eschewing widely anticipated interest rate
calls.
The rupiah slipped 0.4% to 16,383 per dollar, a level not
seen since early July last year, extending a decline from the
previous day when Bank Indonesia slashed its benchmark interest
rate by 25 basis points, against expectations of no change to
policy.
"The surprise decision to pivot back to rate cuts in the
face of FX pressures seems abrupt and incongruous with BI's
prioritisation of IDR stability over the past two years,"
analysts at Barclays said.
They expect the rupiah to test the 16,500 mark by the end of
the first quarter.
Jonathan Koh, Asia economist and FX analyst at Standard
Chartered, said BI's retention of the language on maintaining
rupiah stability "may allay some, but not all, concerns over
whether it is more focused on supporting growth or keeping the
IDR stable."
"Even if BI remains focused on attracting USD inflows,
investor conviction to long IDR versus the USD may be soft.
Moreover, foreign bond positioning is already neutral."
The South Korean won declined 0.2%, slipping from
a one-week high, after the Bank of Korea held interest rates
unexpectedly against economists' expectations of a quarter-point
cut.
Foreign exchange risks could be a concern for the Bank of
Korea, Maybank analysts said. "Regardless, upside risks remain
for USDKRW given U.S. tariffs threats linger on the horizon."
The surprising decision by the BOK and BI underscores
challenges faced by Asian central banks as they try to spur
growth and defend their currencies against a towering dollar
while preparing for tariffs from the incoming administration of
U.S. President-elect Donald Trump.
Equities in Seoul, however, rose 1% to a nearly
one-week high.
Most other Asian currencies found support from a
depreciating dollar which stood just under recent peaks after
cooling U.S. inflation data knocked down bond yields.
An index of emerging market currencies edged
higher, continuing on its recovery path from a six-month low
touched earlier in the week.
While a rate cut from the Federal Reserve in the January
28-29 meeting is still unlikely to happen, markets are pricing
in a rate cut in June this year.
A resilient economy, the threat of broad tariffs on imported
goods and mass deportations of undocumented immigrants - actions
that are deemed inflationary - had led the Fed to project a
shallower rate-cut path this year.
Singaporean equities rose 0.7%, its first gain in six
sessions, while stocks in the Philippines advanced 1.3%.
Taiwanese stocks leapt 2.6% ahead of the earnings
report from the largest contract chipmaker in the world, Taiwan
Semiconductor Manufacturing Co (TSM), that is expected to
post a jump due to surging demand.
Elsewhere, the Israeli shekel rose to its highest
level in a month after news of a ceasefire agreement between
Israel and Hamas.
HIGHLIGHTS:
** Japan wholesale inflation steady near 4%, keeps alive BOJ
rate-hike chance
** Detained South Korea's Yoon will not attend questioning,
lawyer says
** Vietnam considers removing barriers for China-made COMAC
aircraft to operate in the country
Asian
stocks and
currencies
at 0357 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY YTD % DAILY % YTD %
%
Japan +0.44 +0.90 0.40 -3.25
China 0.00 -0.44 0.21 -3.52
India -0.09 -0.95 0.71 -1.13
Indonesia -0.34 -1.71 0.57 0.56
Malaysia +0.04 -0.60 0.13 -4.76
Philippines +0.26 -0.69 1.32 -1.76
S.Korea -0.18 +1.03 1.02 5.12
Singapore -0.02 -0.15 0.73 0.33
Taiwan +0.34 -0.52 2.61 0.29
Thailand -0.01 -0.82 -0.23 -3.58
(Reporting by Sneha Kumar in Bengaluru; Editing by Saad Sayeed)
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