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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
IDR
- News broke during yesterday’s trading session of intervention by Indonesia’s Central Bank (‘the BI’) in the FX markets following the decline in IDR spot to 15,431.
- In 2024, IDR has averaged 15,784 with a high of 16,450 in June, and a low of 15,100.
- Whilst the BI do not publish any currency target levels, it is very clear that their mandate is currency stability.
- In order to maintain stability, the BI requires FX reserves (typically USD).
- Over the last 5 years, the BI has done a good job in accumulating reserves with the 1-year average reserves up to US$142bn, an increase from the 5-year average of US137bn.
- This is a result of the strength of the domestic economy, the period of (relative) political stability and the international flows into the domestic bond market as a result.
- The currency moves this week are potentially symptomatic of two things namely the swearing in of a new Indonesian government and the improving odds of Donald Trump in the US Presidential race (which at this stage is seen as USD/US yield supportive).
- It is quite likely that with the confidence of the reserves behind them the BI will be more likely to intervene in the weeks ahead to smooth the volatility in their currency.
- Whilst the US political cycle will impact the FX more, global investor portfolio flows will also be impacted by the domestic political cycle.
- It is early days in Prabowo’s government and the appointment of Ms. Indrawati to retain her finance position has been greeted positively.
- We will keep one eye on global investor portfolio flows for government bond as an indicator for how global investors are judging this new era in Indonesian politics.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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