Investing.com — Asian currencies were mostly firmer on Tuesday, with China’s yuan reaching a fresh four-year high after a strong daily fixing by the People’s Bank of China, as the U.S. dollar weakened and investor confidence showed signs of recovering.
Political risks remained in focus as France imposed curfews in several cities after nationwide anti-government protests intensified pressure on President Emmanuel Macron in his final months in office, while Italy said it would deploy 500 troops following two days of unrest.
The Chinese yuan’s USD/CNH pair fell to an intraday low of 6.6775 per dollar, its strongest level since July 2022, before trading at 6.6781. The onshore yuan also strengthened to 6.6791 per dollar.
The rally followed a firm daily fixing by the People’s Bank of China and stronger-than-expected economic data, with China’s economy growing 4.5% year-on-year in the third quarter and September retail sales accelerating.
The stronger growth outlook has reduced pressure on Beijing to roll out more aggressive stimulus, while the PBOC kept its benchmark lending rates unchanged, as expected, at 3.00% for the one-year loan prime rate and 3.50% for the five-year rate.
The U.S. dollar index fell 0.2% to 101.78, reversing part of Monday’s 0.2% advance to 101.98, which had ended a two-session losing streak. The EUR/USD pair rose 0.2% to 1.1233, while the GBP/USD pair gained 0.20% to 1.3333.
Rupiah remains vulnerable after MSCI downgrade warning
The Indonesian rupiah recovered slightly on Tuesday, with the USD/IDR pair down 0.1% at 17,995.7, but the currency remained close to the 18,000-per-dollar level after a sharp selloff triggered by concerns over Indonesia’s status in global equity benchmarks.
The rupiah weakened 0.6% to 18,070 per dollar on October 16, its weakest level since late July, after index provider MSCI proposed consulting on a potential reclassification of Indonesia from emerging-market to standalone-market status.
The warning triggered a severe selloff in Indonesian equities. The Jakarta Composite Index plunged nearly 12% on Friday and fell further on Monday, leaving the benchmark down roughly 15% over the two sessions.
It rebounded about 3% on Tuesday after authorities introduced measures to contain volatility and pledged further reforms. The two-day rout erased about $82 billion in market value, while the rupiah has lost around 8% against the dollar this year.
