Rupiah Firms On BI's FX Comments, Despite Signs Of Reaching Peak Of Rate-Hike Cycle

Spot USD/IDR has eased off even as Bank Indonesia left interest rates unchanged, while Governor Warjiyo said there's no need for further rate hikes as inflation eases faster than expected. The official's comments on the FX front may have lent support to the rupiah.

• Governor Warjiyo told reporters that he expects the IDR to keep appreciating in line with strong economic fundamentals but refused to set a target on the exchange rate. He said that the central bank will use its export earnings policy and Operation Twist bond purchases to help stabilise the IDR amid Fed tightening. Re: the former, Warjiyo flagged new tools to be deployed to encourage export earnings to be kept onshore, such as high-yielding deposits with the central bank.
• The central bank revised its 2023 GDP growth outlook higher to +5.1% Y/Y versus +4.9%-5.0% previously, due to the anticipated China reopening and a recovery in private consumption. Headline inflation is expected to fall below +4.0% Y/Y in September.
• Spot USD/IDR trades -48 figs at IDR15,157, erasing yesterday's gains. USD/IDR 1-month NDF last -63 figs at IDR15,158.
• The rupiah is the best performer in emerging Asia today, cementing its position as a regional leader this year.