Emerging Markets: Rupiah drops to historic low before BI decision; Asia FX weakens

Thai Beverage Public

19/05/2026 08:51

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Indonesia worries weigh on rupiah before BI rate decision

Tech-heavy markets drag MSCI Asia index lower

Singapore benchmark up 0.9%, India stocks up 0.4%

By Roushni Nair and Sruthi Narasimha Chari

May 19 (Reuters) - The Indonesian rupiah slid to another record low on Tuesday, leading declines in Asian currencies as domestic jitters kept investors wary ahead of Bank Indonesia's policy decision later this week, where most economists now expect a rate hike.

The rupiah IDR= weakened to 17,730 per U.S. dollar, extending Monday's slide, as worries over the economic fallout from the Iran war compounded concerns over Jakarta's spending plans, central-bank independence and capital-market transparency.

Continued Bank Indonesia intervention, a steadier domestic political backdrop and easing Middle East tensions will be needed to draw foreign inflows, said Krung Thai Bank strategist Poon Panichpibool.

Wednesday's BI rate decision will test whether policymakers are ready to shift from intervention to monetary tightening, with currency stability now the top priority. "BI may need to hike rates again to curb rupiah weakness and support capital markets," Panichpibool said.

A slim Reuters poll majority expects a rate hike, the first since April 2024. Just last month all 31 economists polled had forecast a hold through the year.

The Indian rupee INR=IN also slid to a record low of 96.44 per dollar, taking its losses since the Iran war erupted in late February to about 6% as higher oil prices, rising U.S. yields and subdued inflows deepened external-sector pressures.

U.S. President Donald Trump said he had paused a planned attack on Iran to allow negotiations, helping stabilise bond markets after a two-day selloff and leaving the U.S. dollar USD= broadly steady.

Still, investors remained wary of export-heavy Asian markets exposed to higher global yields and weaker risk appetite. The South Korean won KRW=KFTC weakened 0.8%, while the Taiwan dollar TWD=TP slipped 0.3%.

Regional equities also came under pressure, with MSCI's EM Asia equities gauge .MIMS00000PUS falling 1.5%, dragged lower by a 3% slide in South Korea's KOSPI .KS11 and a 1% decline in Taiwan stocks .TWII.

Bucking the trend, Singapore's equity benchmark .STI rose 0.9% to a record high of 5,041.06 points, supported by strong April export data, AI-related electronics demand and the perceived security of the city-state's bank-heavy, defensive market.

Singapore Airlines SIAL.SI gained 1.9%, while beer-maker Thai Beverage TBEV.SI rose 4.5%.

The Philippine peso PHP= slipped 0.06% to 61.65 per dollar, while Thailand's baht THB=TH fell 0.3% to 32.6 against the dollar.

Indian stocks .NSEI climbed 0.39%, with IT shares .NIFTYIT jumping 3.5% on hopes of easing U.S.–Iran tensions.

HIGHLIGHTS:

** Japan's solid Q1 GDP faces reality check on Iran war

** Thai business group maintains 2026 GDP growth forecast

** Malaysia's April CPI rises 1.9% on year

Asia stock indexes and currencies at 0711 GMT
COUNTRY
FX RIC
FX DAILY %
FX YTD %
INDEX
STOCKS DAILY %
STOCKS YTD %
Japan
JPY=
-0.18
-1.55
.N225
-0.44
16.82
China
CNY=CFXS
-0.06
+2.71
.SSEC
0.94
5.07
India
INR=IN
-0.10
-6.81
.NSEI
0.36
-9.16
Indonesia
IDR=
-0.48
-5.95
.JKSE
-3.45
-26.31
Malaysia
MYR=
+0.03
+2.09
.KLSE
0.07
2.91
Philippines
PHP=
-0.11
-4.67
.PSI
-0.75
-2.58
S.Korea
KRW=KFTC
-1.02
-4.56
.KS11
-3.25
72.55
Singapore
SGD=
-0.19
+0.39
.STI
0.90
8.51
Taiwan
TWD=TP
-0.39
-0.73
.TWII
-1.75
38.71
Thailand
THB=TH
-0.34
-3.68
.SETI
0.07
20.57

(Reporting by Roushni Nair and Sruthi Narasimha Chari in Bengaluru; Editing by Harikrishnan Nair and Ronojoy Mazumdar)

((Roushni.nair@thomsonreuters.com))