BENGALURU (June 3): The rupiah extended its gains on Friday as Indonesia’s decision to issue palm oil export permits after lifting a ban on shipments last week supported sentiment, while other regional currencies gained ahead of a crucial US jobs report.

Indonesia’s rupiah, which jumped 0.7% on Thursday, rose a further 0.4% to hit its highest since April 27, while the Korean won was up 1% and set to record its best week since mid-March.  

Most currencies in Asia, which had struggled to notch gains over the week, strengthened as market participants awaited key US jobs data later in the global trading day for clues on the Federal Reserve’s tightening path.

On Thursday, a senior Indonesian trade ministry official said the government had issued 160 export permits to 18 companies to ship palm oil. The country had previously imposed a three-week export ban to control soaring domestic prices of cooking oil, made from palm oil.

“Besides broad dollar softening, news of authorities granting more export permits for palm oil likely aided IDR sentiments as well,” analysts at Maybank said in a note.

The yield on Indonesia’s 10-year benchmark note hit its lowest since April 18.     

Markets in China, Hong Kong, Taiwan and Thailand were closed, thinning trading volumes across Asia.

Meanwhile, South Korea released data showing its consumer price index rose 5.4% in May from a year ago on a global surge in materials and food costs, beating the 5.1% growth estimated in a Reuters poll and cementing the case for further rate hikes.

“The central bank’s likely intense focus on inflation should favour urgency rather than patience and suggests hikes will continue to be back-to-back,” said Brian Tan, an economist at Barclays.

He now expects the Bank of Korea to hike its policy rate by 25 basis points at all four remaining meetings this year.

Shares in the region were also set to close the week on a firmer footing, as investors looked to the US jobs report later in the day for confirmation of a slowdown in the employment market, which could convince the Fed to go slow on interest rate hikes later in the year.

Equities in Singapore, Seoul and Mumbai traded higher.

Jakarta stocks jumped nearly 1% to hit their highest since late April, a day after data showed that while Indonesia’s inflation rate accelerated in May, it was still within the central bank’s target range.

Highlights

• South Korean won on course for best week since mid-March
• Indonesia’s rupiah hits highest since April 27
• Yield on Indonesia’s 10 year benchmark note hits lowest since April 18