SINGAPORE (Reuters): Indonesia’s rupiah was rangebound on Friday after the central bank stepped in to prevent it from sliding further from its five-month lows, while most Asian currencies were under pressure as traders pared back bets of sharp US rate cuts.
Regional stocks tumbled after US President Donald Trump announced new import tariffs, including 100% duties on branded drugs.
A sell-off in Asian drugmakers was led by South Korea’s Samsung Biologics and SK Biopharmaceuticals, which lost 2.1% and 3.5%, respectively.
As a result, Seoul’s KOSPI index tumbled nearly 3% in its steepest one-day decline in eight weeks.
MSCI’s gauge of Asian emerging market equities slipped as much as 1.4%, set for its worst day since August 1, and was on track for its first weekly loss in four weeks.
Taiwan stocks fell as much as 2% in their third consecutive session of losses, while Indian stocks dropped 0.5%, driven by losses in pharmaceutical shares.
Singapore is the most economically exposed to US pharmaceutical tariffs in EM Asia; meanwhile, India might be cushioned by its overall domestic orientation despite the importance of pharmaceuticals in its US exports, Barclays analysts said.
In Indonesia, the rupiah was last down 0.2%. It fell as much as 0.3% to 16,790 per dollar early in the session but inched up around midday after the central bank governor committed to maintaining the currency’s stability, including continued intervention.
Bank Indonesia’s surprise interest rate cut last week, viewed as bowing to President Prabowo Subianto’s push to accelerate growth, exacerbated pressure on a currency already reeling under risks of fiscal slippage.
Barclays’ analysts expect the rupiah to trade in the 16,600 to 16,900 per dollar range over a one-year horizon: “We expect Bank Indonesia to allow the IDR to act as a shock absorber, but lean against the pace of depreciation if it is too volatile or too fast.”
South Korean won weakened to its lowest since mid-May, extending losses beyond the key 1,400-per-dollar level it breached on Thursday.
The selling gained momentum after President Lee Jae Myung said the country would need a currency swap agreement with the US if it accepted Washington’s demands to invest US$350 billion in America as part of the trade deal.
The MSCI index of emerging market currencies fell 0.2% in its seventh straight session of losses. The Indian rupee held above its all-time low, supported by likely central bank intervention.
The Philippine peso was down 2.1% for the week, its worst weekly performance in three years. The Thai baht was set for a 1.2% weekly drop, its worst since late July. – Reuters
