Indonesian rupiah soars as inflation print points to hawkish cenbank stance

Indonesia's rupiah surged more than 1% on Thursday as fears of rate hikes lingered after inflation stayed above the central bank's target range, while a slide in the U.S. dollar on signs of the Federal Reserve easing its pace of policy tightening added heft.

The rupiah USDIDR, which has shed more than 8% this year, firmed as much as 1.3% and enjoyed its best day in nearly three weeks, after data showed Indonesia's inflation eased in November but stayed above the central bank's target range of 2%-4%.

Bank Indonesia (BI) would maintain a front-loaded and pre-emptive interest rate policy next year to control inflation, Governor Perry Warjiyo said on Wednesday.

"Core inflation was tagged as one of the main factors that would drive any BI policy adjustment and we will need to see this head much lower before BI considers reversing its current hawkish stance," said Nicholas Mapa, a senior economist at ING.

"One other factor that could keep BI on the hiking path would be the Indonesian rupiah... We expect BI to follow through with a rate hike in December although we could see BI slow its pace of tightening as early as next year."

Stocks in Jakarta COMPOSITE eased 0.6%.

Broader strength in Asia was supported by comments from Fed Chair Jerome Powell overnight, while easing COVID curbs in China also provided investors with some respite.

"The (Powell's) speech seemingly provided markets some clarity that the down-shifting is coming earlier than expected, as markets were previously still split in their expectations for December," said Yeap Jun Rong, market strategist at IG.

Malaysia's ringgit USDMYR hit a more than five-month high against the U.S. dollar and firmed 1%. The currency has strengthened about 2% since the appointment of a new prime minister last week, but is still down 5.5% for the year.

Thailand's baht USDTHB, which gained on Wednesday after the central bank raised rates by 25 basis points, climbed a further 0.5% to its highest level since June 29.

Most stock indexes also clocked gains with Thailand SET touching a more than two-month high, though stocks in the Philippines PPSEI lost 0.5% and snapped a six-day winning streak.

Philippines' central bank, meanwhile, hinted at policy flexibility to bring inflation back to target.

HIGHLIGHTS:

** Indonesian 10-year benchmark yields fall 7.3 basis points to 6.876%

** China Caixin manufacturing PMI beats at 49.4 vs poll 48.9

** Factory output slumped widely across Asia in November- survey