From Japan to South Korea and India, Asia’s policy makers are stepping up the defense of their currencies as the dollar’s rally shows few signs of easing. Bank Indonesia has also deployed its own version of Operation Twist — selling short-term notes and buying up longer ones — in an effort to shore up the rupiah.
“It seems like many Asian central banks have become more aggressive in trying to reduce downside pressure on their currencies,” said Mitul Kotecha, head of emerging-market strategy at Toronto Dominion Bank in Singapore. “However, it’s a hard battle given ongoing USD strength.”
Bank Indonesia had spent $4.21 billion of its foreign-exchange reserves in July as it sought to limit the rupiah’s losses amid the nation’s widening rate gap with the US.