The rupiah extended gains on Friday as Indonesia’s decision to issue palm oil export permits after lifting a ban on sh ipments last week supported sentiment, while other Asian currencies were up against a softer dollar ahead of a crucial US jobs report.
Indonesia’s rupiah strengthened 0.3 percent to hit its highest since late-April, while the South Korean won was up 0.8 percent.
Most Asian currencies, which had struggled to notch gains over the week, strengthened as market participants awaited key US jobs data later in the global trading day for confirmation of a slowdown in the employment market, which could convince the Federal Reserve to scale down its hawkish stance on interest rates.
A senior Indonesian trade ministry official said on Thursday the government had issued 160 export permits to 18 companies to ship palm oil. The country had previously imposed a three-week export ban to control soaring domestic prices of cooking oil, made from palm oil.
The yield on Indonesia’s 10-year benchmark note hit its lowest since late-April and bonds across the yield curve strengthened, helped by a soft domestic inflation print.
Indonesia’s inflation rate accelerated in May due to rising food prices and airfares, but was still within the central bank’s target range.
Analysts at Nomura expect Bank Indonesia to leave its policy rate unchanged at its upcoming policy meeting this month.
They, however, warned that in doing so, “BI could be viewed as already behind the curve, which would threaten IDR stability amid widening current account deficits and a faster Fed hiking cycle, forcing BI to ultimately hike more aggressively.”
Jakarta stocks jumped nearly 1 percent to hit their highest since late-April, while shares in Mumbai and Seoul rose 0.8 percent and 0.4 percent, respectively.
