The Indonesian rupiah is leading a rally in Asia’s emerging-market currencies as bets grow that the US will slow rate hikes, bolstering risk sentiment. 

The rupiah gained as much as 1.3% against the dollar, the most in more than two months, while the baht climbed more than 1% to its highest level in about 10 months. Most Asian currencies are stronger. 

Easing inflationary pressures in the US have raised expectations of a smaller rate hike in the upcoming meeting of the Federal Reserve, while optimism over China’s reopening has also brightened the outlook for some of the regional currencies.

Eoin Treacy's view

Last week’s lower CPI reading has led the wider investment community to conclude the peak of the interest hiking cycle is upon us. The Dollar took another leg lower on the news and supported everything from gold to crypto and non-US dollar denominated stock markets.

The Indonesian Rupiah firmed in a dynamic manner to confirm support in the region of the 2020 low. It is now testing the region of the 200-day MA which is the first area of near-term resistance so some consolidation is likely.

The Thai Baht’s rebound confirms a failed downside break and suggests a retest of the 30 area is a strong likelihood over the medium term.

The Malaysian Ringgit has also posted a failed downside break.

The Singapore Dollar is overbought in the short term as it tests the upper side of a seven-year range.

The US Dollar denominated MSCI ASEAN Index rallied to break a yearlong sequence of lower rally highs as it firms from the region of the 200-day MA.