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Warjiyo's Comments & Worrying Coronavirus Situation Conspire Against Rupiah


USD/IDR has crept higher and last trades +45 pips at IDR14,045, chewing into yesterday's losses. Participants digested comments from BI Gov Warjiyo, who signalled potential for further policy easing, as well as a record daily tally of deaths from Covid-19.

  • BI Gov Warjiyo said that the central bank has room to cut its benchmark interest rate further and "we will see" if the Bank will use it. The Governor underscored the importance of rupiah stability and noted that the central bank is focused on overcoming a "credit crunch," as lending rates remain high despite low policy rate.
  • As a reminder, BI left its benchmark rate unchanged yesterday, in line with market expectations.
  • Elsewhere, Indonesia reported 346 new deaths from Covid-19 on Thursday, the highest number of fatalities since the beginning of the outbreak. The authorities responded by extending movement restrictions in Java and Bali by two weeks through Feb 8. The surge in fatalities comes at the time when hospitals in Jakarta are reaching capacity, with some patients turned away due to lack of space.
  • Bank Indonesia said that it will change its methodology for calculating the reference rate in interbank market. The new methodology will be implemented from Apr 5.
  • BI's Hendarsah noted that the central bank offered 1-month domestic NDF at IDR14,079 through brokers.
  • A break above the 50-DMA at IDR14,089 would allow bulls to target the 38.2% retracement of the Oct 14 - Jan 4 slide/Jan 12 high at IDR14,204/14,205. Bears need a pullback under the IDR14,000 mark before taking aim at Jan 4 cycle low of IDR13,865.
  • Bank Indonesia will release broad money developments data for the month of Dec.
  • Elsewhere, there is little of note on the local docket today and next week.

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