USD/IDR Price News: Rupiah refreshes 21-month high, ignores Indonesia inflation, budget updates

• USD/IDR prints four-day uptrend to print the highest level since October 2020.
• Indonesia Inflation came in firmer for June, FinMin Sri Mulyani Indrawati tries to defend the currency buyers.
• US dollar cheers broad risk-off mood ahead of ISM Manufacturing PMI for June.

USD/IDR refreshes a two-year high of around $14,988 as risk-aversion underpins the US dollar buying during Friday’s Asian session. In doing so, the Indonesia Rupiah (IDR) pair fails to cheer upbeat inflation data and economic updates from home, conveyed recently by Finance Minister (FinMin) Sri Mulyani Indrawati.

Indonesia's Inflation for June rose to 4.35% YoY versus 4.17% forecast and 3.55% prior. However, the Core Inflation eased below 2.72% market consensus to 2.63% YoY. That said, the Inflation print rose to 0.61% MoM compared to 0.44% expected and 0.40% prior.

Following the inflation report, Indonesia FinMin Indrawati crossed wires, via Reuters, while conveying hopes of a lesser fiscal deficit in 2022 due to strong revenue. “Indonesia will likely book a 2022 fiscal deficit of 732.2 trillion rupiah, or 3.92% of gross domestic product, smaller than the government's previous forecast of 4.5% of GDP, due to strong revenue forecasts,” said the policymaker.

Reuters adds details while mentioning, “Sri Mulyani Indrawati told a hearing with parliament's budget committee this meant the government would cut debt issuance to 757.6 trillion rupiah ($50.64 billion), from 943.7 trillion rupiah in her previous target.” Indonesia FinMin Indrawati, who is also Bank Indonesia Governor, also mentioned that Indonesia's central bank is in no rush to hike interest rates even as June consumer prices rose at the fastest pace in five years, per Reuters.

Elsewhere, the US Dollar Index (DXY) picks up bids to reverse the previous day’s pullback from a two-week top as market sentiment worsens over growth fears. That said, the US Dollar Index (DXY) reversed from a 12-day high to snap a two-day uptrend by closing Thursday’s trading around 104.75, near 104.80 by the press time.

On Thursday, the downbeat US personal spending and softer prints of the Fed’s preferred inflation gauge raised concerns over the health of the world’s largest economy and drowned the US dollar. The greenback’s previous retreat could also be linked to the downbeat US Treasury yields as the benchmark 10-year bond coupons dropped below 3.0%, before recovering to 3.01% at the closing, to portray around 50 basis points (bps) of a fall from June’s peak.

While portraying the mood, the S&P 500 Futures drop 0.80% to mark a five-day downtrend whereas the US 10-year Treasury yields reverse early Asian session rebound to 2.967%, refreshing the three-week low.

Given the risk-aversion wave and the US dollar strength, the USD/IDR may extend the latest run-up. However, the US ISM Manufacturing PMI for June, expected 55.0 versus 56.1 prior, as well as risk catalysts, for fresh impulse.

Technical analysis

Multiple hurdles marked during 2020 challenge the USD/IDR bulls targeting the $15,000 round figure. However, the sellers have the least scope of entry unless breaking the previous resistance line from mid-May, around $14,925 by the press time.