Asian stocks, forex up after Fed's bumper cut

Emerging Asian markets gained on Thursday following the US Federal Reserve's oversized rate cut, while Indonesian stocks hit a record high and the rupiah strengthened a day after the country's central bank trimmed the benchmark interest rate.

Indonesia's benchmark index climbed as much as 1 per cent to an all-time peak of 7,903.325 points, while the rupiah advanced 0.6 per cent to its highest level since September 2023.

The Bank Indonesia (BI) unexpectedly cut interest rate on Wednesday by 25 basis points to 6.00 per cent, just hours ahead of the Fed rate decision as it moved to bolster economic growth amid rupiah stability. "The surprise cut looks to have sent a positive signal to markets that BI may be increasingly confident that the global macro environment is becoming more supportive of the IDR," Maybank analysts said in a note.

Maybank said that the positive signal of a cut from the BI was counteracting the Fed's "less than dovish easing" and lending support to the rupiah.

Bank Indonesia joins the Philippine central bank in easing policy settings before the Fed, which lowered its benchmark policy rate by larger-than-usual 50 basis points on Wednesday.

"With the Fed now moving quite aggressively, the other Asian central banks will feel that they don't have that kind of worry of high US interest rates to contend with," Jeff Ng, head of Asia Macro Strategy at Sumitomo Mitsui Banking Corporation said.

Equities in Manila rose as much as 1.3 per cent to their highest level in two and a half years, and those in Singapore climbed 1.1 per cent to a more than six-year peak.    

The Malaysian ringgit appreciated 0.5 per cent to hover at its highest level since February 2023 and the Philippine peso edged up 0.2 per cent.

Thailand's baht rose 0.5 per cent and stocks added 0.6 per cent after the country's deputy finance minister said interest rates in Southeast Asia's second-largest economy should follow the downward trend in global rates.

Thailand's key interest rate has been at a decade-high of 2.50 per cent for a year, and the Bank of Thailand (BOT) has resisted repeated government calls for a cut.

Meanwhile, China is widely expected to trim its main policy and benchmark lending rates on Friday, according to a Reuters poll.    

The yuan strengthened against the dollar to its highest level since June 2023, and stocks in Shanghai rose 0.7 per cent.