EMERGING MARKETS-Indonesian rupiah hovers near record lows on fiscal woes, trade war risks

By Nichiket Sunil

Jan 19 (Reuters) - The Indonesian rupiah teetered near record lows on Monday as fresh uncertainty from U.S. President Donald Trump's threat of extra tariffs on European nations added to pressure from concerns over the country's widening fiscal deficit.

The rupiah IDR= tumbled the most in more than two weeks to 16,945 per U.S. dollar, its weakest point since early April last year, and slightly above its all-time low of 16,970.

Investor concerns about fiscal discipline in Indonesia, Southeast Asia's top economy, intensified after it reported the widest budget deficit in more than two decades for 2025, nearly hitting the legal limit of 3% of GDP.

That, alongside higher inflation and concerns over Bank Indonesia's autonomy continue to pressure the rupiah.

Indonesian President Prabowo Subianto has nominated his nephew to join the central bank's board of governors, Reuters reported earlier on Monday, citing two sources.

Shaun Lim, a currency strategist with Maybank, attributed the rupiah's weakness to rising domestic fiscal concerns, and global uncertainty, which would affect "vulnerable" currencies such as the rupiah.

Meanwhile, Bank Indonesia is expected to keep its key borrowing rate unchanged on Wednesday.

Elsewhere, the Philippine peso PHP= slid 0.1%, continuing to hover just above its record low of 59.524 a dollar.

The Indian rupee INR=IN, Asia's worst-performing currency in 2025, also slid marginally to hit 90.99 a dollar, the lowest since mid-December.

The Malaysian ringgit MYR= inched lower ahead of the central bank's meeting on Thursday, where markets have largely priced in a hold.

Stocks in the region were largely mixed. Indonesia's .JKSE benchmark traded at record levels, while Singapore .STI, down 0.4%, was set to break a six-session rally.

South Korea's KOSPI index .KS11 climbed as much as 1.3% to end at a record closing high, rising for a 12th consecutive session, led by a sharp 16.2% surge in Hyundai Motor 005380.KS on optimism around its humanoid robots.

Taiwan stocks .TWII also notched a record close, with top contract chipmaker, TSMC 2330.TW, also ending at an all-time peak after gaining as much as 2.3%.

Both the East Asian benchmarks continue to benefit from artificial intelligence-driven inflows, with a recent trade deal between the U.S. and Taiwan further bolstering optimism. South Korea and Italy agreed to expand cooperation in AI, aerospace, chips, and critical minerals.

In China, fourth-quarter economic growth slowed to a three-year low while the full-year pace hit Beijing's target.

HIGHLIGHTS:
Yield on Indonesia's 10-year government bonds ID10YT=RR jumps to 6.297%, highest since early December
China's population drops for fourth year as fewer babies born
Bank of Singapore appoints OCBC's Collins Chin as global CFO