Asian central banks have implemented aggressive interest-rate hikes through May to support their currencies, but the moves have not stabilized the currencies as hoped [1, 2, 3]. The Sri Lankan rupee gained more than 1% following a 100-basis-point hike earlier this week but fell to about 0.5% lower by Friday, May 29 [1, 2, 3]. Similarly, Indonesia's rupiah rose briefly after a surprise 50-basis-point hike the prior week but subsequently fell to another record low [1, 2, 3]. Pakistan’s rupee remained relatively stable after a comparable 50-basis-point hike in April [2, 3].

The Reserve Bank of India is expected to keep rates unchanged at its policy meeting in early June despite the rupee hitting successive record lows this month [2, 3]. Meanwhile, Philippine central bank officials are weighing a rate increase ahead of their June 18 meeting, according to Governor Eli Remolona, who said, "Officials are considering raising the rate before the next policy meeting on June 18" [2]. New Zealand’s assistant governor Karen Silk stated on May 29 that "all options will be on the table, including a 50-basis-point move, for its next meeting in July" [2, 3].

Asia’s heavy dependence on imported oil limits how much interest-rate hikes can help. Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken, said, "There’s only so much central banks can do to support currencies. The real issue is Asia’s high reliance on imported oil. Global energy supply and prices cannot be influenced by central banks, so they’re in a bit of a bind" [2]. Kenneth Goh, director of private wealth management at UOB Kay Hian, added, "Rate hikes do not fix an oil import bill. A real rebound in the Philippine peso, rupiah and rupee will ultimately depend on oil easing and not on rate hikes" [2].

The timeline of hikes includes Pakistan’s surprise 50-basis-point increase in April, Sri Lanka’s 100-basis-point move from May 22 to 29, followed by Indonesia’s 50-basis-point hike the week before May 29 [1, 2, 3].

India’s central bank is widely expected to hold rates steady during its next meeting the week of June 1 [2, 3]. The Philippine policy meeting on June 18 will be closely watched for possible tightening. New Zealand’s July meeting could deliver more aggressive moves as officials consider all options [2, 3].