Outperforming, Aided By Higher Commodity Prices

USD/IDR edged back above 15000 in the first part of trading, but has seen very little follow through dollar demand. This leaves the pair little changed for the session, which is outperforming the firmer USD backdrop elsewhere in the Asisn FX space. Recent lows in the pair come in around 14960 from last Friday. On the topside, the 200-day EMA comes in close to 15160.

• The better commodity backdrop evident today from a palm oil standpoint is helping. In the early parts of 2022, IDR outperformed amid broad based commodity price gains post the Russia invasion of Ukraine. It remains to be seen if the current oil price spike spills over to other commodities, particularly given it is a supply shock. Still, IDR stands better placed than most other parts of Asian FX, particularly the likes of INR.
• There was also decent demand for onshore bonds through the tail end of March at the end of last week (+305.3mn in daily inflows on Thursday). So that may be helping residual IDR demand at the margins.
• Whether this stays the case remains to be seen. A lot may depend on how core yields react to this oil price spike. Still, the longer term outlook looks to be positive from a yield point for IDR, given major central banks are now much closer to the end point of tightening cycles, rather than the beginning.
• On the data front today we have already had the Mar PMI, coming in better than the prior read (51.9 from 51.2). Mar CPI came in lower than forecast, headline at 4.97%, versus 5.12% expected.