05/05/2026

BIZ & FINANCE TUESDAY | MAY 5, 2026

17

South Korea and Taiwan stocks hit record highs

India explores steps to mobilise dollar inflows as rupee slides MUMBAI: India’s central bank is studying ways to mobilise dollar inflows to bolster its foreign exchange buffers and cushion rising pressure on the rupee from a spike in oil prices driven by the Iran war, three sources familiar with the discussions told Reuters. The rupee has slumped 5.5% this year, sliding to an all-time low of 95.33 per dollar last Thursday, while foreign exchange reserves have fallen from a peak of US$728.5 billion and equity outflows have hit US$19 billion over March and April alone. The Reserve Bank of India (RBI) has maintained it is comfortable with its reserves – enough to cover 11 months of imports – but the latest policy discussions underscore fresh urgency to bolster defences amid capital outflows. The discussions at the central bank have not been previously reported, though analysts have speculated about how authorities might resurrect elements of their crisis-era playbook. Among the steps being considered is reviving a mechanism last used in 2013 to draw in dollar deposits from non-resident Indians, two of these sources said. A second option being discussed is eliminating withholding tax on overseas government bond investors to encourage flows, they said. No final decision has been taken, and any move would be made in consultation with the government, the third source said. Reuters could not establish when a decision would be taken. “Both are under serious consideration,“ the source added, noting that the final decision on taxation rests with India’s Federal Finance Ministry. The sources declined to be identified since they are not authorised to speak to the media. The war between the US, Israel and Iran – now in its third month – has weakened the Indian currency, adding to a near 5% fall in 2025. The two measures under consideration could help draw in dollars from overseas. The deposit scheme was used to stabilise the rupee in 2013 and brought in about US$26 billion at a time when US interest rates were close to zero. At the time, the central bank allowed banks to swap dollars raised via such deposits at concessional rates. The second option under discussion is removing a 5% withholding tax charged to foreign investors in Indian government bonds, which could encourage inflows, the sources said. Foreign investors were net buyers of Indian government bonds in 2025, investing about US$6.5 billion, but that momentum has coolled in 2026, with inflows of only around US$1.1 billion so far this year as sentiment turned more cautious after the Iran conflict. Equity outflows have accelerated, taking cumulative 2026 withdrawals to about US$20.6 billion – exceeding outflows for all of 2025. The measures will primarily help bolster foreign exchange reserves and steady the rupee as well, one of the sources said. – Reuters

HONG KONG: Seoul and Taipei hit record highs yesterday as tech firms led a rally across most Asian markets, tracking a healthy day on Wall Street fuelled by more strong earnings. Investors were also cheered by news that Iran had submitted fresh proposals to end its war with the United States and reopen the crucial Strait of Hormuz, though oil price recovered most of Friday’s losses. While the Middle East crisis continued to rumble along, with the waterway still effectively choked off, dealers turned their focus on the corporate world as they jumped back into the AI trade that has propelled several markets to record highs. Forecast-beating reports from Apple, Google, Microsoft and Samsung have reawakened interest in the artificial intelligence sector after the market tumult caused by the US-Israeli strikes on Iran at the end of February. Companies in the S&P 500 are on track to o Technology companies lead rally across most Asian markets

“In my view, as long as the Strait of Hormuz situation remains unresolved, these types of headlines are likely to provide only temporary pressure on prices rather than drive a prolonged move lower.” Equities started the month on a broadly positive note, following all-time highs for the S&P 500 and Nasdaq in New York on Friday. Seoul surged more than 5% and Taipei jumped more than 4% to hit fresh records. South Korean chip giant SK hynix was the standout, piling on 12.5%, while rival Samsung was up more than 5%. Taiwanese counterpart TSMC was 6.6% up. Hong Kong was lifted by a surge in Chinese tech firms including Alibaba, while Mumbai, Singapore, Manila, Wellington and Jakarta were also up. Paris fell at the open and Frankfurt rose. Tokyo, Shanghai and London were closed for holidays. However, Chris Weston at Pepperstone said: “After a strong April for risk assets, we need to remain open-minded about what May will bring. “This week should provide early signals, but with risk assets pricing in a lot of good news, and rightly so, the time for that to be validated may now be here.” – AFP

report earnings growth of 27.1%, the highest rate in more than four years, according to Factset. Investors have been playing a waiting game since a US-Iran ceasefire was agreed at the start of April, with just one round of talks taking place that came to nothing. In the meantime, the United States maintains a blockade of Iranian ports and Tehran is keeping the strait – through which a fifth of global oil and gas usually passes – closed. Optimism was given a boost on Friday after an Iranian report that Tehran had delivered the text of a new proposal to mediator Pakistan the night before. Donald Trump said on Sunday that “very positive discussions” were underway and that US forces would soon start escorting ships out of the Strait of Hormuz in a “humanitarian gesture” dubbed Project Freedom . However, a senior Iranian official warned yesterday that Tehran would consider any US attempt to interfere in the Strait of Hormuz a breach of the ongoing ceasefire. Oil prices climbed around 2% yesterday after dropping as much as 3% on Friday. “Whether this will lead to sustained weakness in oil remains to be seen,” wrote Fawad Razaqzada at Forex.com.

A man walks past a board showing numbers of the TAIEX Index (centre) and other markets at the Taiwan Stock Exchange in Taipei yesterday. – AFPPIC

Indonesia’s March trade surplus expands to US$3.32 billion JAKARTA: Indonesia’s trade surplus of US$3.32 billion (RM13.12 billion) in March was larger than expected, despite a contraction in exports, as imports grew less than anticipated amid a weaker rupiah currency and public holidays, official data showed yesterday. low of 17,385 against the dollar, amid worries about the war in Iran. Exports from Southeast Asia’s largest economy declined in March by 3.1% annually to US$22.53 billion, below both the 0.96% increase expected in the poll and a 1.01% rise in February. “Escalating geopolitical tensions in the Middle East pose additional downside risks by weakening global trade flows and external demand, while also raising fuel prices and, in turn, increasing import costs,“ he said. Imports were up 1.51% at US$19.21 billion, less than a forecast increase of 10% and a month earlier rise of 10.85%. Gunarto, but he anticipated an increase in April imports due to higher fuel prices. “We see the possibility that Indonesia’s trade surplus could narrow, because there is a surge in fuel imports as oil prices have risen sharply.”

and volatile food prices, cooled slightly to 2.44%, versus 2.52% in the previous month and 2.52% in the Reuters poll. The Iran war triggered global spikes in prices of oil and other commodities, but the government has boosted spending on subsidies to shield most consumers from rising fuel prices. The central bank has said inflation is expected within its target range of 1.5% to 3.5% until 2027, due to subsidies and a joint effort with government officials to control food prices. Bank Indonesia will probably be able to keep its key policy rate unchanged at 4.75% if the government maintained prices of subsidised fuel, Myrdal added. – Reuters

The April annual inflation rate eased to 2.42% from 3.48% in March, the data showed, and was also below economists’ expectations of a 2.76% rate. The April reading was helped by a fading low-base effect due to electricity tariff discounts early last year that affected inflation in previous months. Annual core inflation, which strips out government-controlled prices

Exports were down due to lower shipments of mining products, such copper and lignite, as well as goods such as cocoa, coffee and tea, among others, Statistics Indonesia senior official Ateng Hartono told reporters. Shipments were probably affected by last year’s front-loading of exports to the United States, compounded by slower global demand, particularly from China, Bank Permata economist Faisal Rachman said.

The March surplus was larger than both the median forecast of US$2.41 billion in a Reuters poll of economists and a month earlier figure of US$1.28 billion. The resource-rich country has run sizeable surpluses in recent years, but analysts expect exports to be affected by slower global demand due to the Middle East war, while a weaker rupiah raises import costs. Last week the rupiah hit a record

Economists said imports in March returned to normal after businesses frontloaded purchases ahead of the Eid Al-Fitr holidays in the month’s second half, and in anticipation of supply chain disruption due to rising geopolitical tension. The Iran war has not dramatically impacted the March trade data, said Maybank Indonesia economist Myrdal