Indonesia's rupiah fell to a four-year low on Friday, pressured by a strong dollar even as the local central bank intervenes in the foreign exchange market to maintain investor confidence, while most other Asian currencies drifted within tight ranges.

The rupiah fell as much as 0.7% to hit 16,375.00, its lowest level since early April 2020. For the week, it was down more than 1%, and has now lost 6% year-to-date, making it the second-worst performing currency in the region after the Thai baht. The rupiah weakness comes a week ahead of the Bank Indonesia's (BI) monetary policy meeting where it is widely expected to keep interest rates unchanged. But with the rupiah under pressure, analysts have not ruled out a rate hike.

"Our base case is for Bank Indonesia to stay on hold, but the risk of a 25 basis point rate hike is relatively high, in our view, especially if the currency comes under renewed pressure," Barclays analysts wrote in a client note. Indonesia's central bank said on Friday it had intervened in the foreign exchange market to maintain confidence and ensure supply and demand of the rupiah, adding that monetary policy would be consistent to ensure inflation was under control and the currency was stable.

Elsewhere in Asia, the Japanese yen fell to a more than six-week low after the Bank of Japan (BOJ) stood pat on rates and said it would trim bond buying in the future, pressuring other regional currencies and bonds as well.

Asian currencies have been pressured by the BOJ not sending as clear a signal about reducing bond purchases as the market expected, said Poon Panichpibool, a markets strategist with Krung Thai Bank, with a detailed plan not due until next month. "It has kind of disappointed the market in the way that added to further weakness in the Japanese yen and drove the U.S. dollar higher," he said. The dollar index, which measures the greenback against a basket of major currencies, was trading at 105.29 as of 0408 GMT, supported by the likelihood of the Federal Reserve keeping interest rates higher for longer.

In Asia, the South Korean won, the Taiwanese dollar, the Thai baht, and the Malaysian ringgit declined between 0.1% and 0.2%. Most Asian currencies were on track to end the week in the red, if the trend holds, with the Thai baht, South Korean won, and the Malaysian ringgit losing between 0.4% and 1%. Among equities, Singapore stocks fell 0.5%, eyeing their worst week since April 19, while those in Jakarta declined 0.3%, hitting the lowest level since November 2023.

Elsewhere in Asia, the International Monetary Fund approved the second review of Sri Lanka's $2.9 billion bailout. HIGHLIGHTS: ** Thai PM says setting new inflation target range should increase rate cut chance ** Malaysia keeps inflation outlook for 2024 after diesel subsidy reforms ** US govt returns $156 mln worth of 1MDB funds to Malaysia, embassy says Asia stock indexes and currencies at 0326 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCKS DAILY % YTD % X DAILY YTD % % Japan -0.44 -10.5 <.N2 0.72 17.16 6 25> China EC> India +0.00 -0.40 <.NS 0.00 7.67 EI> Indonesi -0.64 -5.96 <.JK -0.26 -6.31 a SE> Malaysia -0.06 -2.51 <.KL -0.23 10.44 SE> Philippi +0.11 -5.52 <.PS -0.09 -1.00 nes I> S.Korea 11> Singapor -0.05 -2.38 <.ST -0.48 2.11 e I> Taiwan -0.19 -5.11 <.TW 0.42 24.96 II> Thailand -0.07 -6.98 <.SE -0.01 -7.36 TI> (Reporting by Adwitiya Srivastava in Bengaluru; Editing by Jamie Freed)