|

Asia FX: KRW and IDR face technical strain – OCBC

OCBC’s FX Strategist Sim Moh Siong says softer Oil prices offer only limited relief to Asia FX, with the Korean Won and Indonesian Rupiah still pressured by equity outflows and policy concerns. He argues KRW fundamentals remain strong but are overshadowed by technical equity flows, while Bank Indonesia (BI) has reportedly stepped up FX intervention to stabilise the IDR.

Technical flows overshadow strong KRW

"Oil-importing Asia saw some relief from softer oil prices overnight, but FX remained under pressure, led by KRW and IDR. KRW weakness prompted renewed verbal intervention, while Bank Indonesia (BI) reportedly stepped up FX intervention to support the IDR."

"Recent KRW underperformance reflects flows rather than fundamentals. Fundamentals are positive: Semiconductor exports are strong, the KOSPI is rallying, and the Bank of Korea is signalling further rate hikes. "

"However, the AI-driven equity surge is concentrated in a handful of names, triggering rebalancing and foreign outflows due to concentration limits. This technical drag may persist near term and delay KRW upside."

"In Indonesia, parliament passed a sweeping financial sector law expanding BI’s mandate and introducing parliamentary performance reviews of BI officials."

"The mandate now more explicitly includes growth and employment alongside price and FX stability. Finance Minister Purbaya Yudhi Sadewa downplayed concerns, noting many central banks already factor in growth and jobs."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD recovers toward 0.7000 amid improving mood

AUD/USD is firming up toward 0.7000 in Asia on Tuesday, helped by improving market mood. A pause in the US Dollar rebound also aids the pair's upside. However, geopolitical risks and caution ahead of AI tech earnings report could limit the pair.

USD/JPY flatlines near 158.50 as markets seek direction

USD/JPY steadies around 158.50 in the Asian trading hours on Tuesday. Traders prefer to wait on the sidelines ahead of Japan’s National Consumer Price Index inflation data later on Friday. Meanwhile, elevated US bond yields provide some support to the US Dollar against the Japanese Yen.

Gold alternates gains with losses below $4,200

Gold prices trade without a clear direction on Tuesday, hovering around the $4,170 region per troy ounce and still struggling to regain upside traction following Monday’s pullback. In the meantime, lower US Treasury yields and a marked pullback in the US Dollar come in tandem with the yellow metal’s price action.

Crypto Today: Bitcoin, Ethereum, XRP tick lower amid mixed ETF flows

Bitcoin is trading above $81,000 on Tuesday, aligning with a lethargic tone in the broader cryptocurrency market. Altcoins, including Ethereum and Ripple, reflect Bitcoin’s lock-step price action, trading below $2,400 and $1.30, respectively.

Markets at a turning point: Bitcoin, Gold, FX and Tech react to a heavy macro week

The new trading week opens with a mixed but revealing picture across global markets. Indices, commodities, FX, tech stocks, and cryptocurrencies are all sending one message: risk appetite is alive, but it is cautious, selective, and highly sensitive to macro signals.

The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.