Rupiah Not Benefiting From Broader USD Weakness

USD/IDR is holding close to recent highs. The pair was last at 15717, +4 figs for the session. Earlier highs were close to 15730, but a broadly softer USD backdrop has helped pull us back from these levels. Recent cyclical highs sit around 15750, while the post US CPI low was around 15400.

• The rupiah continues to underperform broader USD/Asia moves. The IDR NEER (J.P. Morgan Index) is only modestly above recent lows, last close to 72.10. This is still close to 6% below September highs.
• The currency is likely showing greater sensitivity to renewed Fed hawkishness, while elevated US real yields weigh as well, although IDR looks a little too weak relative to these trends.
• Foreign investors have increased their holdings of local bonds, albeit from depressed levels, helping local bonds outperform the recent UST sell-off. Equity flow remain absent though, as onshore equities broadly shift sideways.
• The local data calendar is quiet, with only consumer confidence due between now and the end of the week.