Indonesian rupiah falls to 4-year low, Thai baht down 1%

The Indonesian rupiah slid to a four-year low on Wednesday as the U.S. Federal Reserve indicated rates could remain elevated for longer than anticipated, bolstering the greenback to the detriment of riskier Asian assets.

The rupiah USDIDR fell 0.6% to 16,265 per dollar, a level last seen on April 8, 2020.

The Thai baht USDTHB, however, lost the most ground, tumbling more than 1% to its lowest point since Oct. 10. The Philippine peso USDPHP gave up 0.4% to hit its weakest level since Sept. 26.

Once a popular carry-trade currency, Indonesia's high-yielding bond market has lost appeal due to currency volatility and the wafer-thin spreads it offers over dollar markets.

The rupiah, which has lost over 5% so far this year, has had a particularly rough time this week as markets reopened from a week-long Eid al-Fitr holiday. On Tuesday, it slid 2.3%, its biggest intra-day percentage fall since March 2020.

The central bank, Bank Indonesia, has had to continuously intervene in the forex market to restrict the rupiah's fall and to ensure adequate supply and demand and market participants are now pricing in the possibility that it will hike rates.

"We now forecast the USD/IDR at 16,200 (15,850 previously) in the next 3 months before strengthening modestly to 15,650 in 12 months on anticipation of US rate cuts and some stepping down of Middle East tensions," Lloyd Chan, an FX strategist at MUFG, said in a note to clients.

Overnight, comments from Fed Chair Jerome Powell signalled monetary policy needs to be restrictive for longer, dismissing any expectations of the Fed cutting rates in the near term.

The U.S. dollar index DXY - a measure of the greenback against six major rivals - was last at 106.31, just below the five-month peak of 106.51 touched on Tuesday.

In the Philippines, the peso weakened past the 57.000 level against the dollar, after the central bank hinted it is not in a hurry to ease monetary policy rates. It now expects its first rate cut will likely happen in the fourth quarter of 2024 or the first quarter of next year.

In Thailand, the baht has been hurt by mounting economic weakness, the country's high exposure to rising freight costs and the potential for rate cuts.

Bucking the trend, the South Korean won USDKRW advanced as much as 0.9% after the country's finance ministry said it was ready to deploy measures to stabilise excessive volatility.

Equities in Southeast Asia were largely mixed with stocks in Shanghai 000001 and Taipei TAIEX adding over 1% each, while those in Bangkok SET lost over 2%.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields rise 2.5 basis points to 6.964%

** Singapore's March non-oil domestic exports fall 20.7% y/y

** Markets in India are closed for a public holiday