Indian rupee leads Asia FX gains, rupiah turns up with intervention

Indian rupeeThe Indian rupee hit a five-week high on Thursday.

The Indian rupee hit a five-week high on Thursday as exit polls predicted a strong showing for the key opposition party in recent state elections, while Indonesia's rupiah turned higher with intervention spotted.

The rupee rose as much as 0.9 percent to 61.52 per dollar, its strongest since Oct. 31 as the opposition Bharatiya Janata Party (BJP) and its prime ministerial candidate were perceived as being more business-friendly and willing to undertake economic reforms.

The rupiah earlier slid 0.5 percent to 12,035 to the greenback, its weakest since March 2009, on strong dollar demand from Indonesian companies.

It turned up as the central bank was spotted selling dollars to support the worst-performing Asian currency. Foreign banks also sold the dollar, with the rupiah also turning higher in non-deliverable forwards markets.

"The 12,000-mark is a crucial level. BI must do whatever it takes to defend it," said a Jakarta-based trader, referring to Bank Indonesia.

"We don't want 2008-2009 levels to be broken," the trader added.

Analysts have said the rupiah may weaken to 12,150, the low of March 2009, and the next target is seen at 12,600, the low of 2008.

Due to Indonesia's current account deficit, the rupiah is regarded as the Asian currency most vulnerable to capital outflows once the U.S. Federal Reserve finally starts winding down a stimulus strategy that has fuelled dollar inflows to emerging markets.

Most emerging Asian currencies edged up, tracing the yen's rebound. The South Korean won gained as exporters' demand prompted short-covering.

Still, investors hesitated to add more bullish bets on regional units before U.S. November jobs data on Friday for clues as to when the Fed begins cutting its bond-buying programme. Sentiment on most emerging Asian currencies, except the rupee, had already turned more bearish in the last two weeks, a Reuters poll showed earlier.

Please read our terms of use before posting comments
TERMS OF USE: The views expressed in comments published on indianexpress.com are those of the comment writer's alone. They do not represent the views or opinions of The Indian Express Group or its staff. Comments are automatically posted live; however, indianexpress.com reserves the right to take it down at any time. We also reserve the right not to publish comments that are abusive, obscene, inflammatory, derogatory or defamatory.