Bank Indonesia raised its benchmark interest rate by half a percentage point in an unscheduled move, joining the biggest emerging markets in implementing measures to shore up slumping currencies. The rupiah rose.

The central bank increased the reference rate to 7 percent from 6.5 percent, it said, after a meeting in Jakarta today that came before the next scheduled policy review. It also raised the deposit facility rate by half a point to 5.25 percent, and extended a bilateral swap deal with the Bank of Japan valued at $12 billion that will allow the two to borrow from each other's foreign-exchange reserves.

Indonesia joins Brazil, Turkey and India in taking steps to support their currencies this month as the prospect of reduced U.S. monetary stimulus prompts investors to sell emerging-market assets. A record current-account deficit last quarter for the Southeast Asian nation, and worse-than-estimated economic growth and inflation data have led to a stock-market slump and helped push the rupiah to its weakest level since April 2009 yesterday.

“What they can do now is to limit the collateral damage from the potential U.S. policy shift,” said Wellian Wiranto, a Singapore-based investment strategist at the wealth management unit of Barclays Plc. “The Fed's previously abundant fountain of liquidity is turning into a black hole pulling everything in. BI can only try to anchor things as much as they can.”

Eoin Treacy's view The speed with which capital has migrated from many Asian markets has been a cause for concern for the respective governments, not least because it increases the cost of commodities in their currencies. The counter argument is that these declines lend a competitive advantage to countries in terms of manufacturing that has been eroded by currency strength over much of the last decade.

For investors the question now is whether the affected stock markets represent value or whether currency market volatility is likely to continue. I thought it might be instructive to review some of the more relevant charts.

Indonesia's surprise rate increase today highlights the anxiety administrations feel, at the speed with which many Asian currencies have declined. The Jakarta Composite hit a medium-term peak in May and has since experienced its deepest decline since 2008. The Index found at least short-term support this week. The Rupiah has declined by 15% against the US Dollar this month alone and found at least short-term support today. In US Dollar terms, the JCI dropped to post is lowest level since 2010 this week and while oversold in the short term, damage will have been done to confidence.

India's current account deficit has been making daily headlines and the local price of oil represents a significant headwind for the economy. The RBI has been forced to abandon the rate cutting it had embarked on earlier this year and interest rate hikes are looking increasingly likely. The Nifty Index has at least stabilised above 5000 and while this week has been characterised by high volatility, there is capacity for some additional firming. The Bombay Banks Index has returned to test the 2011 lows and has developed a deeply oversold condition. The Rupee has fallen from 45 to almost 70 versus the Dollar in the last two years and found at least short-term support this week, following what looked like climactic action yesterday. In US Dollar terms, the Nifty Index has lost a third of its value since May and while oversold in the short term, time will be needed to rebuild confidence.

The Philippines Composite has also experienced its deepest decline since 2008 and found at least short-term support today. The US Dollar rallied to break the medium-term progression of lower rally highs against the Peso by mid-June, and broke out again this week to reassert the medium-term uptrend. Potential for some form of intervention by the central bank has increased but a clear downward dynamic will be required to check the Peso's slide. In US Dollar terms, the PCOMP hit a new reaction low yesterday but has some room for steadying considering the extent of the short-term oversold condition.

The Malaysian market has been a regional outperformer this year and found support this week in the region of the 200-day MA. The US Dollar completed a more than two year base against the Ringgit late last month and a sustained move below MYR3.2 would be required to begin to question medium-term scope for additional outperformance. In US Dollar terms, the KLCI has returned to test the lower side of this year's trading range.

Singapore's Straits Times Index has dropped from near 3500 in May to test the 3000 area, breaking the 18-month progression of higher reaction lows in the process. The Singapore Dollar appreciated from S$1.85 to S$1.20 in the decade to 2012 but the currency's appreciation has lost momentum over the last 18 months, suggesting a peak of at least medium-term significance. The STI's US Dollar denominated chart is broadly similar to the local currency version.

From the above charts we can conclude that short-term oversold conditions are evident on the majority of South East Asian markets and that central banks are beginning to take action to stem the decline in their respective currencies. The majority of indices bounced today and there is scope for an additional short covering rally. However, since they have almost all experienced quite significant technical deterioration, the most bullish scenario is likely to involve a good deal of ranging in order to rebuild confidence over the medium term. .