USD/IDR Just Below October Highs, As Tomorrow's BI Meeting Comes Into Focus

The bias in spot USD/IDR remains a buy on dips strategy. Equally though, we aren't seeing a break higher in the pair. Latest spot levels deal at 15730, little changed versus Tuesday closing levels. Highs from last week around 15740 remain intact. Beyond that lies end Dec 2022 highs of 15763. Recent dips towards the 15680 level have been supported. The 20-day EMA continues to trend higher, last near 15600.

• The near term macro focus rests with tomorrow's BI policy meeting. No change is expected but IDR weakness may be in renewed focus. The weaker IDR doesn’t mean that there needs to be another hike when the economy doesn’t need it, BI has other tools it can use to strengthen the currency. Still, a prerequisite for the start of an easing cycle is likely to be IDR stabilization (see the full preview here).
• Also note tomorrow registration for the upcoming presidential election (held in February 2024) will open. Current senior minister Mahfud MD has been selected as Ganjar Pranowo's running mate (see this BBG link for more details).
• In the cross-asset space, the move higher in US real yields is supporting USD/IDR dips. Local equities remain largely sideways from a trend standpoint. This week has seen modest offshore equity outflows.
• Palm oil prices have moved off recent lows, but this is yet to impart the rupiah positively.