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Rupiah Weakens Despite Expectations That Bank Indonesia Could Raise Rates

IDR

The Fed's monetary policy decision is in rear-view mirror and focus turns to the imminent announcement from Bank Indonesia, which is widely expected to raise the 7-Day Reverse Repo Rate by another 25bp (see our preview here). Indonesia's central bank was a latecomer to the global tightening campaign, while yesterday's 75bp rate rise in the U.S. leaves it further behind.

  • Spot USD/IDR last sits +41 figs at IDR15,039, hitting its best levels since 2020. The next layer of resistance is provided by May 5, 2020 high of IDR15,138. Bears would be pleased by a sell-off past Sep 12 low of IDR14,818.
  • USD/IDR 1-month NDF last +12 figs at IDR15,076. Topside focus falls on Jul 21 high of IDR15,133, while bears keep an eye on the 100-DMA, which intersects at IDR14,830.
  • Indonesia's 5-Year CDS premium soared this week, extending gains after the Fed's rate hike. It last sits at ~135bp, printing near two-month highs.
  • Palm oil futures firmed Wednesday as a jump in Malaysian exports signalled recovery in demand. Buying interest has petered out as the contract for December delivery last deals MYR44/MT lower on the day.
  • Foreign investors sold a net $60.7mn in local stocks Wednesday, while Jakarta Comp slipped. The benchmark index found poise this morning and has recouped its opening losses to last trade near neutral levels.
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