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USD/IDR Consolidates After Yesterday's Sharp Spike Higher, BI Seen On Hold Later

IDR

USD/IDR is a touch firmer as we head towards the BI decision later. The pair last just under 15600. An earlier move above 15615 drew selling interest, while on the downside we haven't been sub 15585 so far today. These moves follow yesterday's sharp IDR sell off (down nearly 0.90% in spot terms), which BI stated related to temporary corporate USD demand.

  • More broadly USD/IDR spot remains wedged between its simple 100-day MA (15406) and the 50-day MA, near 15635.
  • The BI is expected to remain on hold later. As we noted in our preview, while the central bank has a number of existing and new instruments to ensure FX stability, given recent currency depreciation it is unlikely to want to risk destabilising the IDR by easing monetary policy ahead of the Fed. So, rates are also likely to be “high for longer” in Indonesia, see the full link here for more details.
  • Elsewhere, the recent USD/IDR has coincided with some stability in US real yields.
  • Cross asset sentiment is positive though, with 5yr CDS continuing to track lower, while local equities are outperforming today (JCI up +1.40%).
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