USD/IDR Firms, Market Awaits Further Details On New Government

USD/IDR has firmed in the first part of Friday dealing, last near 15660. The 1 month NDF is just above 15670, around 0.15% above end NY levels from Thursday. These moves keep us within recent ranges, albeit with spot testing resistance above the 20-day EMA near 15660. Recent lows around 15565 remain intact.

• IDR is diverging somewhat from the positive local equity market trend. The JCI up a further 0.80% so far today, the index now close to the 7400 level, which is near early Jan highs. Yesterday saw a chunky $174.8mn in offshore inflows into local equities, the most in 2 months.
• The likelihood of clear election winner and policy continuity is aiding the Indonesian asset backdrop, although markets will look to the cabinet make up (particularly in terms of the FinMin) and fiscal discipline as important signposts for the new regime.
• The latter is likely to be important around debt flow momentum, which are modestly negative YTD from an offshore investor standpoint.
• Equally though the elevated backdrop for US real yields (just off recent highs above 2% for the 10yr), will remain a key driver of IDR sentiment.