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Rupiah Prints Cycle Lows As Gov Warjiyo Pours Cold Water On Hawkish BI Bets

IDR

Renewed aversion to risk coupled with dovish BI talk have allowed spot USD/IDR to rip through recent cycle highs and run as high as to IDR14,863, its highest point since Oct 2020. The rate last deals +45 figs at IDR14,857, with bulls setting their sights on Sep 25/11, 2020 highs of IDR14,919/14,950.

  • USD/IDR 1-month NDF last +50 figs at IDR14,880, narrowing in on Jun 16 high of IDR14,891. A break here would open up Sep 24/10, 2020 highs of IDR15,104/15,150. Bears keep an eye on May 16 high of IDR14,772.
  • Spot MYR/IDR popped higher as Gov Warjiyo's dovish comments hit the wires, with its 100-DMA giving way as a result. This reinforces the double-bottom pattern formed between mid-Apr and mid-June, suggesting that bullish momentum remains in place. The pair last deals +8 figs at IDR3,377, the next topside target is provided by the 200-DMA at IDR3,393.
  • Meanwhile, spot SGD/IDR has struggled to break above recent highs and last sits +8 figs at IDR10,706. Further gains past Jun 17/Feb 8 highs of IDR10,717/10,718 would confirm that bulls are still having the upper hand.
  • Bank Indonesia will steal the limelight this week, with the latest monetary policy decision coming up Thursday (see our preview here). On the eve of the meeting, Governor Warjiyo said that "we do not need (...) to rush into increasing interest rates" and "will manage our low interest rate policy of 3.5% until there is fundamental inflation pressure." The official also played down the risk of inflation staying elevated for a longer time. All in all, his comments suggested that the central bank is not ready to raise its main policy rate just yet.
  • On a different front, note that Indonesia is tightening COVID-19 countermeasures for large-scale events amid a flare-up in new infections.
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Renewed aversion to risk coupled with dovish BI talk have allowed spot USD/IDR to rip through recent cycle highs and run as high as to IDR14,863, its highest point since Oct 2020. The rate last deals +45 figs at IDR14,857, with bulls setting their sights on Sep 25/11, 2020 highs of IDR14,919/14,950.

  • USD/IDR 1-month NDF last +50 figs at IDR14,880, narrowing in on Jun 16 high of IDR14,891. A break here would open up Sep 24/10, 2020 highs of IDR15,104/15,150. Bears keep an eye on May 16 high of IDR14,772.
  • Spot MYR/IDR popped higher as Gov Warjiyo's dovish comments hit the wires, with its 100-DMA giving way as a result. This reinforces the double-bottom pattern formed between mid-Apr and mid-June, suggesting that bullish momentum remains in place. The pair last deals +8 figs at IDR3,377, the next topside target is provided by the 200-DMA at IDR3,393.
  • Meanwhile, spot SGD/IDR has struggled to break above recent highs and last sits +8 figs at IDR10,706. Further gains past Jun 17/Feb 8 highs of IDR10,717/10,718 would confirm that bulls are still having the upper hand.
  • Bank Indonesia will steal the limelight this week, with the latest monetary policy decision coming up Thursday (see our preview here). On the eve of the meeting, Governor Warjiyo said that "we do not need (...) to rush into increasing interest rates" and "will manage our low interest rate policy of 3.5% until there is fundamental inflation pressure." The official also played down the risk of inflation staying elevated for a longer time. All in all, his comments suggested that the central bank is not ready to raise its main policy rate just yet.
  • On a different front, note that Indonesia is tightening COVID-19 countermeasures for large-scale events amid a flare-up in new infections.