Rupiah set for relief as RBNZ pressure kiwi


SINGAPORE • Two of the year’s worst-performing Asia-Pacific currencies are poised to enter the fourth quarter with dramatically different support from their central banks.

New Zealand officials are expected to keep the possibility of a rate cut on the table when they meet on Thursday.

It’s a contrast in Indonesia where policymakers are forecast to hike rates for a fifth time in as many months to safeguard against capital flight.

It sets the stage for a rupiah rebound and kiwi under performance through the end of the year even as both currencies suffer from trade-war angst and a downturn in emerging-market sentiment.

New Zealand business confidence plunged to a 10-year low in August, helping push the kiwi to 0.6501 per dollar earlier this month, the lowest since 2016. That raises the stakes for September’s survey due less than 24 hours before Reserve Bank of New Zealand’s (RBNZ) decision.

While the currency has recovered in recent days on stronger than expected growth data, investors remain wary of a rate cut.

In contrast, 23 of 31 economists surveyed by Bloomberg expect Indonesia to raise rates by 25 basis points (bps) on Sept 27, while six are calling for 50bps of tightening.

Officials have already raised rates by 125bps since May and drained about 10% from foreign reserves this year to help bolster the rupiah.

Bank Indonesia’s decision on Thursday may help reinforce rupiah’s recovery.