Indonesian rupiah leads gains among Asian currencies; stocks down

Asian currencies appreciated against the dollar on Friday as marginal weakness in the U.S. dollar powered gains across the region, with the Indonesian rupiah leading the pack on potential further rate hikes to control inflation.

The rupiah USDIDR extended gains into a third session to appreciate almost 1%, eyeing its best week since November 2020, after inflation data on Thursday showed some signs of cooling but stayed above the central bank's target range of 2% to 4%.

Stocks in Jakarta COMPOSITE lost 0.5%, tracking their worst week since mid-October.

To tame inflation, which is near its highest rate in seven years, Bank Indonesia has lifted interest rates by a total of 175 basis points (bps) this year, stating that further moderate rate hikes will be needed to bring it under control.

"We keep our forecast for BI to continue hiking (interest rates) to reach its terminal level of 6% in the first quarter of 2023," said Enrico Tanuwidjaja, an economist at UOB.

Elsewhere, the Singapore dollar USDSGD and South Korean won USDKRW appreciated 0.12% each, adding over 1.6% and 0.6% this week, respectively.

Malaysian ringgit USDMYR firmed 0.2% on Friday, marking its fourth straight week of gains, while stocks in Kuala Lumpur BURSA gave up 0.6%, losing 0.3% in value this week.

Philippine's peso USDPHP jumped 0.5% to mark its fifth straight day of gains, while stocks PPSEI led losses across Asia with a 1.9% decline.

The sharp moves come after the country's central bank governor said it will hike interest rates this month, with the monetary board likely split between a 25 and 50 bps adjustment. The Bangko Sentral ng Pilipinas is slated to meet on Dec. 15.

Meanwhile, the International Monetary Fund flagged rising inflationary pressures and China's economic slowdown as risks to Asia's economic outlook, stating that aggressive tightening of U.S. monetary policy may trigger abrupt reversals of capital flows or sharp currency depreciation.

Stocks across Asia were subdued ahead of the U.S. non-farm payroll data for any more clues on the Federal Reserve's rate outlook. Stocks in South Korea KOSPI and Singapore STI lost 1.4% and 0.7%, respectively.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields falls 0.9 basis points to 6.847%

** South Korea Nov inflation slows to 5.0%, lowest in 7 months

** The dollar index DXY up 0.191% at 104.840 vs Thursday's low of 104.56