Wedged Between Keys EMAs, Govt To Require 30% Export Earnings To Be Held Onshore For 3 Months

USD/IDR is tracking lower in the first part of trade, with the pair back to 15165, -0.20% lower for the session so far. This is in line with broader USD weakness, as broader market sentiment has taken on a slightly more risk-on tone ahead the US CPI print later.

• The pair remains wedged between key EMAs for now. On the topside is the 50 and 100 days (between 15260 and 15283 respectively), while on the downside is the 20 and 200 day (15122 and 15130 respectively).
• We did dip briefly below 15160 in early trade but follow through has been limited. Economic Affairs Minister, Airlangga Hartarto, stated the government will ask exporters to keep 30% of their earnings onshore 3 months, per Bloomberg reports. The policy is expected to yield $40-50bn in reserves in a 12 month period.
• Such plans were aired back in Jan, so won't come as a complete surprise to the market, which may be limiting USD/IDR follow through.
• The rupiah has also shown sensitivity to global risk moves in recent weeks, so the market may be looking for this policy to demonstrate that it can help manage IDR volatility, particularly during times of stress, before it takes a more constructive view on the FX.
• Outside of the US CPI focus, tomorrow we get Jan trade figures for Indonesia. The market expects a slightly lower trade surplus ($3.25bn, versus $3.890bn prior).