The rupiah led gains in Asia and had its biggest weekly rally in five months on signs Jakarta Governor Joko Widodo won Indonesia’s presidential race, while South Korea’s won and India’s rupee declined.
Widodo had about a 5 percentage point lead, according to unofficial counts from two survey companies that declared him the winner of the Wednesday vote, a projection disputed by his opponent, Prabowo Subianto. Official results are to be announced by July 22. Most Asian currencies declined on Friday after signs of financial distress in Portugal fueled demand for the US dollar.
“We can see a further rally after the final result, even if much of the expectation for Jokowi’s win has been priced in,” said David Sumual, chief economist at PT Bank Central Asia in Jakarta. “The focus will turn to the new Cabinet.”
The rupiah gained 2.5 percent this week to 11,590 per US dollar on Friday in Jakarta, the most since the five days ended Feb. 14, prices from local banks show.
In Taipei, the New Taiwan dollar weakened 0.2 percent against the greenback to US$29.990, amid concern over the financial situation in Portugal, where a leading shareholder of the country’s second-largest lender, Banco Espirito Santo, missed its debt payments.
The weakness of other regional currencies, including the won and the yuan, further encouraged traders to cut their NT dollar holdings, dealers said.
The won weakened 1 percent to 1,018.92 and the rupee dropped 0.3 percent to 59.9350. The Bloomberg JPMorgan Asia Dollar Index fell 0.1 percent on Friday and was little changed this week.
The Bank of Korea on Thursday reduced its expansion projection to 3.8 percent from 4 percent even as it held its benchmark rate at 2.5 percent. There is a possibility of a rate cut this quarter, Nomura Holdings Inc and Goldman Sachs Group Inc said in reports on Thursday.
The yuan was little changed at 6.2037 this week, China Foreign Exchange Trade System prices show. China is committed to reducing currency intervention as conditions allow, according to a joint statement with the US after the Strategic and Economic Dialogue in Beijing that ended on Thursday. US Treasury Secretary Jack Lew called the pledge a “big change.”
Elsewhere in Asia, Thailand’s baht rose 0.7 percent from July 4 to 32.158 per US dollar and the Malaysian ringgit was steady at 3.1858. The Philippine peso weakened 0.2 percent to 43.552, while Vietnam’s dong gained 0.4 percent to 21,200.
The US dollar fell the most versus the yen in 13 weeks as the US Federal Reserve signaled willingness to keep borrowing costs at unprecedented lows even as the US labor market improves.
Japan’s currency climbed against most of its 16 major peers and US Treasuries gained as Portugal’s banking problem prompted demand for safer assets.
The US dollar fell versus most major counterparts after minutes of the Federal Open Market Committee’s (FOMC) meeting last month failed to provide additional insight on the pace of rate increases.
“Slightly dovish FOMC minutes was the first trigger,” said Masafumi Takada, a New York-based director at BNP Paribas SA. “Declining US yields as well as ongoing geopolitical risk aversion are putting pressure on dollar-yen.”
The US dollar fell 0.7 percent on the week to ￥101.30 in New York, the biggest drop since the period ended April 11. The greenback weakened 0.1 percent to US$1.3608 per euro. The yen rallied 0.6 percent to 137.90 per euro after appreciating to 137.50, the strongest since Feb. 6.