IDR Underperforms Softer USD Trends, Q2 Current Account Deficit Wider Than Expected

USD/IDR sits slightly above earlier lows, the pair last near 15325. The rupiah is modestly underperforming the softer USD trend seen elsewhere. Earlier lows in the pair came in at 15318. Recent highs from mid August recent around 15360, while support has been evident around 15280/85 in recent sessions. The nearest EMA is around 15207, for the 20-day.

• On the data front, the Q2 current account was weaker than expected, printing at -$1.9bn, versus -$268mn expected. The Q1 print was just under +$3bn. As a share of GDP the deficit was -0.5% in Q2.
• While the market expected the current account to shift back into deficit, the worst than expected result is likely weighing on IDR sentiment at the margins, particularly given the continued move higher in US real yields. It also underscores the best of Indonesia's ToT tailwind is now behind us.
• Elsewhere, BI Governor Warjiyo stated that the central bank will continue with a pro-stability rate policy in 2024. Monetary policy, via interest rates, will be complemented by FX stabilization and reserves adequacy. The Governor stated that BI doesn't have to follow the Fed rate path higher and can raise short term bond yields to provide an offset (presumably this will be done via the BI's twist bond buying program).
• Portfolio outflows remain a headwind for the local FX, with a -$150.3mn in equity outflows yesterday. Bond outflows are more modest.