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TD Securities On The Lookout For Forceful FX Intervention From BI

INDONESIA CENTRAL BANK

In the wake of today’s BI action TD Securities write “we think the overnight leap in USDIDR past the 15,800 level probably caught authorities' attention and triggered them to take decisive action to stem the sell-off in IDR.”

  • “However, we suspect the 25bps hike may have only a transient effect as US-ID rate differentials are likely to stay wide, given the sell-off in US rates, while capital outflows are worsening.”
  • “Capital outflows have risen with bond outflows, accelerating since early August while equities flows remain negative YTD.”
  • “With the upward drift in US rates, the risk is that the broad USD continues to catch a bid and pressures Asia FX lower.”
  • “We suspect that USDIDR will be well bought on dips and see the path of least resistance as heading towards the 16,000 level, which could necessitate some forceful FX intervention from BI.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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