LONDON: The Indonesian rupiah strengthened after the central bank kept its interest rate unchanged as widely expected on Wednesday, while equities in emerging Asia were a mixed bag with South Korea and Taiwan leading the losses.
The MSCI Emerging Market Asia index fell as much as 0.6 per cent to its lowest in over a week.
Shares in Taiwan lost around 1 per cent as chipmaking giant TSMC weighed on the index, while those in South Korea ended 0.8 per cent lower.
Equities in Malaysia touched their highest level in more than three years, helped by a broad-based rally across most sectors.
The rupiah crept higher to 16,090 per dollar after the interest rate decision, a few pips ahead of where it lingered most of the session.
It has gained 0.5 per cent for the day, and is hovering around its highest level since late May.
Bank Indonesia held its key interest rate at 6.25 per cent as widely expected, saying the current level remained consistent with efforts to anchor inflation and manage the currency.
The rupiah, which languished around four-year lows in late June, has seen some relief over the past couple of weeks as rising U.S. rate cut bets softened the dollar.
A U.S. interest rate cut would widen yield differentials compared to Indonesia, making local bonds more attractive and increasing inflows.
"The rupiah outlook will be key for the monetary policy going forward," Lloyd Chan, senior currency analyst at MUFG, said.
"In the second half, we think BI will likely have to stay patient for a while longer, keeping interest rates high for longer," Chan said, further warning that the currency will remain vulnerable to cross currents, including fiscal uncertainty, monetary policy, and U.S. elections.
Elsewhere, the Singapore dollar and Thailand's baht advanced 0.2 per cent and 0.4 per cent, respectively, while the South Korean won was up 0.4 per cent.
The yen rose broadly, advancing up to 1 per cent to 156.690 per dollar, a level last seen over a month ago, although traders and analysts were unsure of the reason behind the move.
Among equities, the Malaysian benchmark rose as much as 0.7 per cent to the highest level since mid-March 2021. Stocks in Thailand rose around 0.2 per cent, while South Korean equities were down around 0.8 per cent.
Stocks in Taiwan lost up to 1 per cent, weighed by chipmaker TSMC's more-than-3 per cent fall after U.S. presidential candidate Donald Trump said Taiwan should pay the United States for its defence.