Indonesia stocks weaken as c.bank meeting looms

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(Sept 16): Indonesian stocks slid for the second straight session on Wednesday, ahead of a Bank Indonesia meeting tipped to hold fire on cuts in interest rates that would help a struggling economy in aid of stabilising the rupiah.

The currency, which has weakened 2% so far this month, firmed as much as 0.3% ahead of Thursday's central bank decision, before inching lower along with a number of its Asian peers.

Other stock markets across the region were mixed, with the Philippines, already down nearly 25% for the year, sliding more than 1% after three days of gains amid doubts over a decision on relaxing social distancing norms.

BI has become a focus for foreign investors in Southeast Asian markets in recent weeks, as deliberations around the bank's mandate raised concerns over its autonomy at a time when the economy is sliding into recession.

Indonesia's finance minister on Tuesday forecast a teeper-than-expected contraction in Southeast Asia's largest economy in the third quarter, after coronavirus curbs were reinstated in the capital.

Trading in emerging Asian currencies was largely muted, as investors who have driven four months of dollar weakness awaited a US Federal Reserve policy statement for signs on how it will execute a policy shift allowing for greater tolerance towards inflation.

While the chances of the US central bank delivering actual new policy steps on Wednesday are seen as minimal, analysts at the very least expect the Fed's newest economic projections to point the way to an extended period of lower interest rates. 

"While these (messages) are all expected to keep the greenback subdued, there are plenty of items on the table the market could pick up on," said Jingyi Pan, a strategist with retail trading platform IG.

"Any lack of dovish guidance is not expected to be taken well by the market."