The Malaysian and Indonesian currencies have been among the world's worst performing this year, but some analysts see signs that they'll stop moving together.
The two currencies recently fell to their weakest levels since 1998, during the Asian Financial Crisis, before recovering some of those losses. Concerns that the U.S. Federal Reserve would raise interest rates for the first time in nine years spurred a massive outflow of funds from emerging markets, including Asia's. But the Fed meeting on September 16-17 surprised markets by leaving rates unchanged and many analysts moved their forecasts for the next hike back into next year.
That helped the two hard-hit currencies to recover.
Malaysia's ringgit lost as much as 28 percent of its value against the U.S. dollar from the beginning of the year through the end of September before recovering around 7 percent so far this month. Indonesia's rupiah followed a similar path, shedding nearly 19 percent in the January-to-September period before recovering around 8.5 percent month-to-date.
But it's not clear the two will continue to recover together.
"The rupiah is unlikely to regain its losses from earlier in the year," said Faraz Syed, associate economist at Moody's Analytics, in an email Wednesday. "The rupiah is on a downward trend. U.S monetary policy will eventually normalize. And we expect capital outflows to increase as Indonesia's foreign exchange reserves are low, making it the most vulnerable in Asia."