Indonesian rupiah reverses course after unexpected rate hike

Indonesian rupiah reverses course after unexpected rate hike

* Most Asian currencies decline

* Bank Indonesia raises rates by 25 bps

* Singapore's July core inflation beat forecasts

* Malaysia's ringgit hits more than 5-yr low

By Upasana Singh

Aug 23 (Reuters) - The Indonesian rupiah reversed course on Tuesday to appreciate after the central bank unexpectedly raised its benchmark interest rate to support the currency and preempt a risk of rising inflation, while other Asian currencies retreated on recession fears.

Among other regional currencies, Thailand's baht THB=TH depreciated 0.3%, while Philippines' peso PHP= rose 0.2%.

Bank Indonesia (BI), which had so far stayed away from policy tightening, unexpectedly hiked its benchmark policy rate by 25 basis points (bps) for the first time since 2018. Most analysts surveyed by Reuters had expected the central bank to stay its hand.

Mitul Kotecha, head of EM strategy at TD Securities, said BI was now starting to play catch up.

"I think this is not going to be the last of the tightening in Indonesia ... certainly expect to see more hikes going forward as well," he said, but added the central bank would be data-dependant going forward.

The rupiah IDR= , which traded 0.2% lower throughout the session, reversed course to appreciate 0.3% after the decision, while equities in Jakarta .JKSE remained largely unchanged, advancing 0.7%.

Elsewhere in Southeast Asia, Singapore's dollar SGD= firmed 0.1% after the city-state's key consumer price gauge rose in July at its fastest pace in more than 13 years, heightening expectations of policy tightening by the Monetary Authority of Singapore (MAS).

The MAS has tightened its monetary policy three times this year, twice in surprise moves in January and July. The central bank is next scheduled to meet in October.

Market sentiment was further dampened by an aggressive U.S. Federal Reserve policy view and a renewed surge in European energy prices that stoked recession fears.

The dollar index =USD , which measures the greenback against a basket of major peers, traded flat near its six-week high amid growing fears of a hawkish message from the Federal Reserve's Jackson Hole symposium later this week.

An overnight weakness in crude prices weighed on Malaysia, a net exporter of oil. The ringgit MYR= fell 0.1% and hit its lowest in more than five years, while the country's benchmark index .KLSE declined 0.4%.

South Korea's won KRW=KFTC weakened 0.4% and hit an over 13-year low even as the country's foreign exchange authority issued a verbal warning against speculative trading in the dollar-won on Tuesday.

The Bank of Korea is expected to raise its key interest rate by 25 basis points on Thursday to fight inflation that has surged to an almost 24-year high in July.

Stock markets in the region were mixed, with the Philippine benchmark index .PSI dropping 1.3% and leading losses. Equities in Seoul .KS11 retreated 1.1%, while those in India .NSEI rose 0.2%.


** India cenbank chief: Inflation has peaked, will moderate - ET Now

** Thai capital braces for protests over PM's term limit -

** Major Chinese banks urged to maintain stable loan growth, says

The following table shows rates for Asian currencies against the dollar at 0749 GMT. COUNTRY FX










<JPY= +0.23 -16.10 .N225 -1.19 -1.18



<CNY= -0.16 -7.35

.SSEC -0.05 -9.99



<INR= +0.01 -6.92

.NSEI 0.20



Indonesi <IDR= +0.29 -3.99

.JKSE 0.72

8.77 a


Malaysia <MYR= -0.06 -7.17

.KLSE -0.39 -5.49


Philippi <PHP= +0.20 -9.09


-1.28 -7.08 nes


S.Korea <KRW= -0.42 -11.65 .KS11 -1.10 -18.21


Singapor <SGD= +0.13 -3.37


-0.77 3.64 e



<TWD= -0.36 -8.33

.TWII -0.98 -17.14


Thailand <THB= -0.30 -7.80

.SETI 0.55



Reporting by Upasana Singh in Bengaluru; Editing by Krishna Chandra Eluri