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BI Intervenes To Defend Rupiah As Greenback Strengthens & Foreigners Sell Bonds

IDR

USDIDR rose to 15963 earlier today after closing at 15890 on Monday driven by foreign bond outflows. The approach to 16000 has pushed Bank Indonesia (BI) to intervene in the market and now it is up 0.3% to 15932. BI said that it sees the pressure on the rupiah as only temporary and that it can manage supply and demand in the market. According to Bloomberg, it has been intervening in the FX spot and domestic NDF markets.

  • Overseas investors are concerned that the new government under President-elect Prabowo, which takes over later in the year, will boost spending considerably. USDIDR is up 2.2% since the February 14 election. USDTHB has risen 0.6% today to 36.65 on news that deficits will need to rise to fund the government’s digital wallet scheme.
  • In Q1, global funds sold $1.7bn of Indonesian bonds, the highest since Q3 2022, according to Bloomberg. In this environment trade and current account data will be watched closely.
  • On Monday the USD index rose 0.5%, as the US manufacturing ISM was stronger-than-expected including the price component. The index is slightly higher again today.
  • BI has said that the window to begin its easing cycle is in H2 2024, but it needs the Fed to cut rates first to put downward pressure on the greenback and bring USDIDR down from levels not seen since BI hiked to defend the rupiah in October last year.
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USDIDR rose to 15963 earlier today after closing at 15890 on Monday driven by foreign bond outflows. The approach to 16000 has pushed Bank Indonesia (BI) to intervene in the market and now it is up 0.3% to 15932. BI said that it sees the pressure on the rupiah as only temporary and that it can manage supply and demand in the market. According to Bloomberg, it has been intervening in the FX spot and domestic NDF markets.

  • Overseas investors are concerned that the new government under President-elect Prabowo, which takes over later in the year, will boost spending considerably. USDIDR is up 2.2% since the February 14 election. USDTHB has risen 0.6% today to 36.65 on news that deficits will need to rise to fund the government’s digital wallet scheme.
  • In Q1, global funds sold $1.7bn of Indonesian bonds, the highest since Q3 2022, according to Bloomberg. In this environment trade and current account data will be watched closely.
  • On Monday the USD index rose 0.5%, as the US manufacturing ISM was stronger-than-expected including the price component. The index is slightly higher again today.
  • BI has said that the window to begin its easing cycle is in H2 2024, but it needs the Fed to cut rates first to put downward pressure on the greenback and bring USDIDR down from levels not seen since BI hiked to defend the rupiah in October last year.