Bank of Indonesia Says Will Keep Loose MonPol and Stabilise IDR

Comments from the Bank of Indonesia crossing the wires, the bank noted will keep accommodative monetary policy stance and stabillise IDR in line with fundamentals adding it will accelerate measures to deepen the market and keep developing hedging and FX instruments. The bank's latest forecast is for a contraction of 1%-2% this year, before an expansion of 4.8%-5.8% next year.

• USD/IDR has risen slightly as DXY pauses its weakening trend, IDR is slightly softer after data from the finance ministry showed global funds sold a net $11m of the Indonesian equities yesterday, equating to a fourth day of outflows.
• In a recent note DBS says it expects USD/IDR be more stable around 14000-15000 in 2021 after a volatile 2020. They adduce the low rate environment in the developed markets keeping foreign investors interested in IDR-denominated government bonds which boast the highest yields in Asia, these inflows are expected to support the local currency.
• Favourable carry conditions have enabled Bank Indonesia to cut the policy rate to 3.75%. While the easing the cycle is probably on hold for now, rate hikes are not likely through 2021, supporting Indonesian government bonds in the process.
• USD/IDR last slightly higher on the session at 14132.