USD/IDR Tracking Lower Ahead Of BI Decision

USD/IDR is tracking lower in early dealings, the pair last just under 14900. We closed yesterday 14945, as the pair tracked lower after printing close to 15050 in the first part of the week. The 1 month NDF was last near 14900. Rupiah bulls can target the 50-day MA at 14853.55.

• Later we get the BI decision, which is expected to remain on hold. There is unlikely to be an easing signal in the June meeting statement while the economy is still “solid” and it is unclear how much the Fed still has to do. (see MNI BI Preview - June 2023).
• Supports for the currency have been evident from the downtick in US real yields, with the round of Fed speak, including Powell's testimony not shifting the narrative a great deal.
• Energy commodity prices are higher, although palm oil prices continue to correct lower from their recent bounce.
• Equities are close to flat in early trade, while we continue to see modest outflows from local equity and debt markets from offshore investors.
• Flows into the FX deposit facility remained skewed towards the 1 month tenor (80%), and remain comfortably sub monthly export totals, even with deposits totaling over $1bn since the scheme started.