Indonesian rupiah extends gains on palm oil news, Asian currencies bullish

BENGALURU (June 3): The rupiah extended its gains on Friday as Indonesia’s decision to issue palm oil export permits after lifting a ban on shipments last week supported sentiment, while other regional currencies gained ahead of a crucial US jobs report.

The Indonesian rupiah, which jumped 0.7% on Thursday, rose another 0.4% to its highest since April 27, while the Korean won rose 1% and is expected to record its best week since April. half-March.

Most currencies in Asia, which had struggled to post gains during the week, strengthened as market participants awaited key US jobs data later in the trading day. world for clues on the Federal Reserve’s tightening trajectory.

On Thursday, a senior Indonesian Commerce Ministry official said the government had issued 160 export permits to 18 companies to ship palm oil. The country previously imposed a three-week export ban to control soaring domestic prices of palm oil-based cooking oil.

“Apart from the general dollar easing, news that authorities are granting more export permits for palm oil likely also contributed to IDR sentiment,” Maybank analysts said in a note.

The yield on Indonesia’s benchmark 10-year note hit its lowest level since April 18.

Markets in China, Hong Kong, Taiwan and Thailand were closed, reducing trading volumes in Asia.

Meanwhile, South Korea released data showing its consumer price index rose 5.4% in May from a year ago due to a global spike in materials and materials costs. food, beating growth of 5.1% estimated in a Reuters poll and bolstering the case for further rate hikes.

“The central bank’s likely intense focus on inflation should favor urgency over patience and suggests the rises will continue to be back-to-back,” said Barclays economist Brian Tan.

He now expects the Bank of Korea to raise its key rate by 25 basis points in the remaining four meetings this year.

Stocks in the region were also expected to end the week on stronger footing as investors looked to the US jobs report later in the day to confirm a slowdown in the jobs market, which could convince the Fed to slow interest rate hikes. Later in the year.

Shares in Singapore, Seoul and Mumbai traded higher.

Jakarta shares jumped nearly 1% to their highest since late April, a day after data showed that while Indonesia’s inflation rate accelerated in May, it remained within the range central bank target.

Strong points

  • South Korean victory on track for best week since mid-March
  • Indonesian rupiah at its highest since April 27
  • Yield on Indonesia’s benchmark 10-year note at lowest since April 18

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Felix J. Dixon