* China's export growth accelerates in May
* Hungary's inflation fell in May
* South Africa's first-quarter GDP due later in the day
By Avinash P
June 9 (Reuters) - The Indonesian rupiah strengthened after
the nation's central bank surprised markets with a rate hike to
try to support the falling currency, while equities recorded
their biggest one-day gain in over six years.
The Bank Indonesia raised its borrowing rates by 25 basis points
on Tuesday in an unexpected off-cycle rate hike to aid the
rupiah, which has depreciated by almost 8% so far this
year, making it one of the worst performing currencies among
emerging markets.
The rupiah strengthened to 18,075 after the decision,
bouncing off a record low in the previous session. Jakarta's
stocks rose 6.7% for their best day since March 2020.
ANALYST SAYS MORE REQUIRED THAN A RATE HIKE
"Bank Indonesia's decision to lift its policy rate in an
emergency meeting today reflects growing concerns about the
weakness of the rupiah," said Jason Tuvey, deputy chief emerging
markets economist at Capital Economics.
Beyond the interest rate increase, he said for the currency
to strengthen the Prabowo administration needed to shift away
from its populist and interventionist policy agenda.
"There's still no sign that this is forthcoming," he added.
MSCI's global EM stock index jumped 3.3%, after
logging in its biggest intra-day drop in three-months on Monday.
The recovery was led by an 8.8% advance in South Korea's
KOSPI as investors bought into the dip in AI shares.
A halt in strikes between Iran and Israel also buoyed broader
risk sentiment.
Data from China showed that the country's export growth
accelerated in May, supported by robust demand for chips, autos
and other high-tech goods fuelling the global AI boom.
China's benchmark indexes gained 1.3% and
1.9%, respectively. The yuan added 0.2% versus the
U.S. dollar.
The broader EM currency gauge was up 0.3%,
with a weaker U.S. dollar lending support.
South Africa's stocks gained 0.7%, while the rand
rose 0.4% ahead of the GDP data later in the day.
Economists polled by Reuters estimate a GDP growth of 0.3%
quarter-on-quarter and 1.8% year-on-year.
Turkey's benchmark rose 0.2% and the lira
was flat.
Fitch cut its outlook on the global sovereigns sector to
"deteriorating" from "neutral" due to the impacts stemming from
the Iran war.
In emerging Europe, currencies firmed against the euro, with
Hungary's forint up 0.1%, taking its yearly gain to
7.5%. The currency is also one of the best performers against
the dollar among its emerging market cohorts with a nearly 6%
rise so far this year.
Hungary's headline inflation rate fell to an annual 1.8% in May,
sharply below forecasts, which some analysts said allowed for
the central bank to lower interest rates later this month.
Hungary's equities gained 0.8%. Polish and
Romanian stocks advanced 0.8% and 0.2%, respectively.
HIGHLIGHTS:
** India's RBI offers concessional swaps, allows leverage for
NRI deposits to drive forex inflows
** South Korea Q1 GDP grows 1.8% q/q, stronger than advance
estimate
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