Rupee, rupiah lead Asia FX losses, stocks back in red

[BENGALURU] Most emerging Asian currencies and stock markets fell back into the red on Wednesday (Mar 2), with the Indian rupee and Indonesian rupiah leading losses as escalations from Russia's invasion of Ukraine continued to sully risk mood.

The rupee fell 0.4 per cent, with sentiment further dampened by GDP data coming in below expectations, while the rupiah lost 0.2 per cent.

"The ongoing Ukraine war dampened the prospects of global economic recovery and raised concerns about stagflation. This may have weighed on the Indonesia rupiah as Indonesia is Asean's largest economy," said Margaret Yang, a strategist at DailyFX.

Many Western countries have imposed sanctions on Russia after it commenced what it calls a "special operation" in Ukraine, with one of the major fallouts from this being a sharp uptick in the price of oil, which even breached the US$110 per barrel mark for the first time in 7 years.

The surge comes despite the US and other member states of the International Energy Agency resolving to release oil from their reserves to boost supply and cool prices.

Data late on Monday showed that India's economy grew at a slower pace than the previous 2 quarters, and below market expectations, amid growing fears that fallout from Russia's invasion of Ukraine may further dent economic growth.

This also sent the country's stock market down 1.3 per cent.

Equity markets in Jakarta also reversed early gains to fall 0.6 per cent, after staging a rebound over the last 2 days.

Malaysia's ringgit was largely flat, ahead of an interest rate decision due on Thursday. According to a Reuters poll, markets expect the central bank to hold interest rates at 1.75 per cent, and wait until the third quarter to raise rates.

Analyst at DBS expect the ringgit to ride out the volatility from the Russia-Ukraine crisis given its positive oil and gas trade balance.

The South Korean won fell 0.2 per cent, a day after South Korea joined many Western countries in sanctioning Russian banks. Equities, however, rose 0.6 per cent, being the only stock market in the region to gain.

Palm oil prices also continued to climb, scaling fresh peaks on disruptions from the Ukraine crisis. REUTERS