Rupiah Well Bid At The Start To 2021

The rupiah has had an impressive start to the year, with USD/IDR shedding 170 pips thus far. The rate gapped lower at the re-open, punching through support from the round figure of IDR14,000, and last trades at 13,880, hovering just above next key support from Jun 8 low of IDR13,873.

• A clean breach of IDR13,873 would expose Jan 24/2020 low of IDR13,577. On the topside, a return onto the IDR14,000 handle would allow bulls to target Dec 23 high of IDR14,232.
• The move comes after flattening in the NDF curve, with BBG noting that typical resistance levels for the 1-Month/1-Year & Spot/1-Month spreads remain some way off.
• A parallel dip in USD/yuan has likely helped apply some pressure to the pair, as USD/CNH hit its worst levels since mid-2018 despite a miss in Chinese Caixin M'fing PMI.
• IDR appeared to be on course to start the year on a firmer footing. The rupiah gained impetus into the end of 2020, becoming the second best performer among Asian EM currencies in Q4, despite lagging all of its regional peers in Q3.
• The Health Ministry said that Indonesia plans to inoculate 181.5mn people against Covid-19 by Mar 2022, with vaccination rollout set to begin this month. The nation has already started the distribution of the Sinovac jab.
• In local data, Indonesian Markit M'fing PMI for the month of Dec printed at 51.3, up from the prior reading of 50.6, suggesting that recovery in the sector is picking up pace. Improvement was driven by output and new orders, although spare capacity remained.
• Local CPI report takes focus from here.