IDR: Bank Indonesia to leave the reverse repo rate unchanged at 4.25% - TDS

Sandeep Kanihama FXStreet Contributor

Analysts at TDS expect the Bank Indonesia to leave the benchmark 7-day reverse repo rate unchanged at 4.25%, in line with the unanimous consensus.

Key Quotes

“This decision is likely despite recent softness in CPI (3.25% Y/Y in January vs the 4±1% target), but remains consistent with early signs of acceleration in economic activity, an international context characterized by rising USD rates, and a recent sell-off in global stock markets that has put upside pressure on USDIDR. As a consequence, IDR has sold off approximately 2% vs USD since the last BI meeting on 18 January; this is the third worst performance in the EM FX space.”

“USDIDR is currently trading higher than 13,600, which is above the 13,300/13,500 trading tolerance range that BI, we think, deems in line with Indonesia's fundamentals. As a consequence, we believe BI may sound slightly more hawkish today and, especially, refrain from further easing banks' reserve requirements or introduce alternative quantitative easing measures. We continue to forecast a 25bps hike in Q2, followed by further tightening by the end of Q3.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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