Asian currencies fall, Indonesian rupiah hovers near 4-year lows

Updates as at 0637 GMT

By Rajasik Mukherjee

June 26 (Reuters) –The Indonesian rupiah hovered nearfour-year lows on Wednesday, while other Asian currencies traded in thered as the Federal Reserve’s higher-for-longer monetary policy stance pressuredregional assets.

Hawkishcomments fromFed officialson Tuesday knocked down riskier Asian assets. Investors now await Friday’s personal consumption expenditures (PCE) price index – theFed’s preferred measure ofinflation – for any change to the rate cut outlook.

The U.S. dollar index =USD, which measures the greenback against a basket of major currencies, was trading slightly higher at 105.760 during late Asian trading hours.

A higher U.S. interest rate environment supports the dollar, pressuring emerging market assets.

Back inSoutheast Asia, the Indonesian rupiah fell as much as 0.5% to 16,445.0 per dollar, hovering around its lowest level since April 2020,as a slew of domestic factors, in addition to U.S. monetary policy, continuedto pressure the currency.

The rupiah is facing headwinds from higher foreign exchange demand from domestic companies and uncertainty related to the country’s fiscal plans.

“Near term, the rupiahcould face further downward pressure. A move towards the Covid-low of 16,625 vs the dollar cannot be ruled out,” said Christopher Wong, an FX strategist at OCBC.

“Comments (last week) about the rupiah’sfundamental value below 16,000, recent worries about domestic fiscal plans and broad softness in Asian FX have further added to its softness.”

Elsewhere in Asia, the Japanese yen JPY= pared back some losses to trade flat, as of0637 GMT, after the country’s central bank hinted at possible rate hikes in thenear future.

The South Korean won KRW=KFTC shed as much as 0.3% on Wednesday. Itscentral bank flagged the possibility of downward pressure mounting againon the won, but vowed to step up monitoring of risk factors and stabilise markets as required.

The Philippine peso PHP= traded slightly lower ahead of its central bank’s monetary policy meeting tomorrow, where rates are expected to remain unchanged, a Reuters Poll showed.

The Taiwanese dollar TWD=TP lost 0.3%, while stocks .TWII gained 0.5%, boosted by tech shares rising in tandem with U.S. peers after Nvidia’sNVDA.O overnight surge.

The Thai baht THB=TH lost 0.3%while equities.SETI traded flat. Stocksin Jakarta .JKSE rose as much as 0.8%.

Among other emerging markets, the Mexian peso MXN= traded slightly lower, as of 0637 GMT,ahead of thecentral bank’s monetary policy meeting.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields ticks higher to7.097%

** Steady dollar sends yen to the brink of 160

** BUZZ – Falling yuan may tip Asian currencies over the edge

** MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 0.2%

Reporting by Rajasik Mukherjee in Bengaluru; Editing by Sonia Cheema