Rupiah Leads Southeast Asian Rally After U.S. Data Disappoints

Southeast Asian currencies rallied as U.S. economic data that trailed estimates weakened the greenback, and political developments in Indonesia spurred the rupiah to its biggest gain since March.

The rupiah gained 0.8 percent to close at 11,446 per dollar, prices from local banks show. The Philippine peso advanced 0.6 percent to 43.570, Malaysia’s ringgit rose 0.6 percent to 3.2192 and Thailand’s baht climbed 0.6 percent to 32.430. The increases in the ringgit and the baht were from May 12 as financial markets in the two countries were closed yesterday for public holidays.

The Bloomberg Dollar Index fell the most since May 6 after U.S. retail sales increased 0.1 percent in April from the previous month, compared with the median estimate in a Bloomberg survey for a 0.4 percent gain. Reports due this week are forecast to show Malaysian economic growth accelerated and Philippine remittances gained.

“Regional currencies are keeping the recent appreciation trend against the dollar as investors scavenge for carry,” said Prateek Gupta, a foreign-exchange strategist at Nomura Holdings Inc. in Singapore. “We have seen some positive local developments, especially on the political front.”

Indonesia’s presidential frontrunner Joko Widodo may name his vice presidential nominee on May 16. Hatta Rajasa, former coordinating minister for the economy, said today that he is ready to partner with Widodo’s main rival Prabowo Subianto. With only two strong contenders emerging, it looks like the country will only need to hold one round of elections, said Dian Ayu Yustina, an economist at PT Bank Danamon Indonesia in Jakarta. The vote is scheduled for July 9.

Malaysia Hawkish

“There’s no fresh violence or fresh negative news on the political front for the baht, which may have supported today’s appreciation,” said Roong Sanguanruang, Bangkok-based analyst at Bank of Tokyo-Mitsubishi UFJ.

Malaysia’s economy expanded 5.8 percent in the first three months of this year, from 5.1 percent in the preceding period, according to the median forecast from 21 analysts surveyed by Bloomberg before data due May 16.

Bank Negara Malaysia said it “may need to adjust the degree of monetary policy accommodation” in a May 8 statement released after it held the benchmark rate at 3 percent for an 18th meeting. The statement was taken as an indication the monetary authority is considering raising borrowing costs.

The ringgit may strengthen toward 3.20 by end-June as the dollar weakens, said Nizam Idris, head of strategy for fixed income and currencies at Macquarie Bank Ltd. in Singapore. The central bank’s hawkish monetary statement and accelerating economic growth last quarter will support the currency, he said.

“Our view is that the dollar will remain weak and will only rebound in the second half,” he said.

Data due tomorrow may show the Philippines’ overseas remittances rose 6.5 percent in March from a year earlier, following a 5.6 percent increase in February, according to the median estimate of seven analysts in a Bloomberg survey.

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