BENGALURU (July 20): Indonesia's rupiah led declines among emerging Asian currencies today after the country overtook China with the most confirmed coronavirus cases in East Asia, while the resignation of a fifth Cabinet member in five days hit the Thai baht.
The rupiah lost 0.8% against the US dollar to hit a two-month low, while shares gave up half a per cent, as traders worried that the actual infection rate could be even higher.
Bank Indonesia, which cut interest rates for the fourth time this year last week, today forecast an economic contraction of between 4% and 4.8% year-on-year for the second quarter, predicting a "U-shaped" recovery from the pandemic.
Southeast Asia's largest economy also increased tax incentives for businesses to cushion the blow from the virus, but analysts were sceptical about its impact.
"Tax relief for manufacturing workers and SMEs (small and medium enterprises) due to expire in September have been extended till year end, but likely would not inspire much confidence about the economic recovery," analysts from Maybank wrote in a note.
In Bangkok, the baht fell 0.4% to its lowest since June 1 as Thai Prime Minister Prayuth Chan-o-cha's office said Minister to the Prime Minister's Office Tewan Liptapanlop would quit.
That followed calls over the weekend for the government to resign and an ongoing delay in picking a new central bank chief, which have added to the sudden resignation of Finance Minister Uttama Savanayana last week. Bangkok's benchmark stock index, however, climbed for the second straight session, adding 0.3%.
"The news of a fifth Cabinet minister resigning had weighed on sentiment ... while the index retains moderate gains into the afternoon, we are looking at a number of defensive sectors supporting the gains here reflecting the cautious stance," said IG Market Strategist Jingyi Pan.
Across the rest of the region, stock markets were mixed as investors awaited their cues from Europe and the US on further fiscal stimulus to counteract the effects of the pandemic.
"Given the worsening pandemic conditions in the US and the lead-up to the elections, one suspects that the next stimulus package could be hastened to provide timely support, although the size ... would be the question here," said IG Market Strategist Jingyi Pan.
Philippine stocks, which have been under pressure as virus cases continued to climb, recouped some recent losses and gained 0.5%.