Rupiah Softens After Bank Indonesia Hold Rates

Spot USD/IDR has crept higher today, despite a marginally hawkish hold delivered by Bank Indonesia on Thursday. The rate last sits +19 figs at IDR14,356, with bulls keeping an eye on Jan 19 high of IDR14,374. A break here would expose Jan 6/Dec 21 highs of IDR14,399/14,400. Bears look for a sell-off past Jan 11 low of IDR14,285.

• USD/IDR 1-month NDF last seen +25 figs at IDR14,372. Topside focus falls on Jan 19 high of IDR14,428, followed by Jan 6 high of IDR14,470. Bears look to a dip through Jan 13 low of IDR14,292.
• Bank Indonesia stood pat on interest rates on Thursday, while providing hawkish guidance for the coming months. The overall tone of comments on policy outlook echoed familiar rhetoric, but policymakers provided some more details. Governor Warjiyo announced plans to start policy normalisation by raising the RRR (currently at 3.5%) to 5.0% in March, 6.0% in June and 6.5% by September. Warjiyo had earlier anticipated that the gradual withdrawal of liquidity over 2022 may be followed by a hike to the benchmark 7-Day Reverse Repo Rate, as Bank Indonesia shift to a "pro-stability" from a "pro-growth" stance.