EMERGING MARKETS-Jakarta slips, rupiah firms ahead of BI decision; peso at all-time low

By Sneha Kumar

Oct 21 (Reuters) - Indonesian shares took a step back on Wednesday even as the rupiah clung to its gains ahead of a closely watched central bank policy decision, while the Philippine peso slipped to a record low ahead of its own rate call later this week.

The Jakarta Composite Index .JKSE opened higher but reversed course to dip as much as 1.8%. The benchmark has fallen roughly 11% since MSCI warned of a downgrade to "standalone" status from "emerging market", which could trigger a selloff by passive funds that track global indexes.

The rupiah appreciated to 17,975 per dollar, but remained the worst-performing Asian currency, down 7.3% this year.

Analysts were nearly evenly split about whether Bank Indonesia would hold or raise rates, in a Reuters poll run from October 13 to 19, with some economists raising the prospect of a hike to defend the currency.

"We retain a mildly cautious bias on IDR. The bigger risk would be a sustained withdrawal of foreign portfolio capital, especially if equity selling spills over into the domestic bond market," said Christopher Wong, FX strategist at OCBC.

Bank Indonesia moved up its policy press conference on Wednesday by 30 minutes to 1330 local time (0630 GMT), to accommodate Governor Destry Damayanti's schedule, it said, without providing details.

Elsewhere, South Korea's KOSPI .KS11 jumped 3.2% and Taiwan shares .TWII rose 1.3%, pushing the MSCI gauge of emerging Asia equities .MIMS00000PUS up 1.4%.

Investors cheered a rosier demand outlook for AI from US earnings.

"From a macro perspective, the best lead indicators we track are starting to show signs that Asia's (AI) export growth is rolling off into 2027, but to be clear, implied growth rates remain healthy into 2027, just not as high as what we’ve seen," Michael Wan, senior currency analyst at MUFG, said in a note.

Singapore shares .STI added 0.9%, while the Philippine stock market .PSI extended gains to a fifth day with a 0.2% rise.

The peso , on the other hand, slipped to a record low of 63.245 against the dollar, building the case for the Philippine central bank to tighten policy settings.

A Reuters poll found that analysts are expecting the Bangko Sentral ng Pilipinas to raise interest rates to 5.25% on Thursday, following three consecutive hikes with a cumulative increase of 75 basis points.

Inflation remains a sore point for the central bank, with the September print having accelerated to 7.2%, far above its target range of 2% to 4%.

The Indian rupee firmed to 94.8175 per dollar, with traders positioning for the inflows expected from the highly anticipated $3.2 billion initial public offering of Jio Platforms. The currency has added around 2% in value over the last eight trading sessions.

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