Indonesian Rupiah: Policy synergy focus supports IDR – DBS

FXStreet Insights Team FXStreet

DBS Group Research economist Radhika Rao notes that Indonesia’s parliament has held fit-and-proper hearings for BI Governor nominee Destry Damayanti, who signalled continuity, robust policy tools and stronger coordination with fiscal authorities. Onshore markets have turned more constructive, with USDIDR easing off July highs and the bond curve steepening as foreign investors return to IDR debt.

Governor nominee underpins market confidence

"Indonesia’s parliament held the fit-and-proper hearings for the BI Governor nominee Destry Damayanti on Wednesday. In early remarks at the session, she emphasized that the central bank had a robust mix of monetary, macroprudential and payment system tools at its disposal. Importance of policy synergy and coordination with the government and related agencies were also highlighted."

"Onshore markets turned more constructive this month, amid easing concerns over policy uncertainty, stability in the currency and affirmative remarks on the fiscal outlook. The growth outlook is also supportive, besides a manageable inflation profile. Policy packages by BI in June-July introduced enhancements to hedging activity, providing swap incentives and broadening those linked to local currency transactions."

"This signalled a shift in the central bank’s focus from purely rate hikes to non-rate measures to support the rupiah. USD/IDR is off July highs to hover within 17700-17900, helped also by the broader USD pullback (IDR up +1.6% in Aug). The bond curve has retained a steepening bias with the 10Y yield back around 7% tracking global cues, while the short-to-belly papers continue to benefit from a lower frequency of SRBI auctions and pricing out of further policy tightening expectations."

"Foreign investors have turned positive on IDR debt, with nearly $1bn inflows in Aug yet far (ownership at ~13% of outstanding issuance), besides strong appetite by retail and onshore institutions. We expect the steepening bias to sustain as the incoming Governor is unlikely to act until FX or inflation pressures resurface."

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

Author

FXStreet Insights Team

FXStreet

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.

GBP/USD stays slightly offered below 1.3600

Following an initial drop to fresh six-day lows, GBP/USD now picks up some updside traction and trades in levels just shy of the 1.3600 barrier on Thursday. The generalised cautious tone among market participants continue to underpin the Greenback ahead of Friday’s data releases and the Fed Warsh’s speech.

EUR/USD struggles for direction around 1.1650

EUR/USD gyrates around the 1.1650 region amid the absence of clear direction and following an earlier drop to the 1.630 area. The pair’s vacillating mood comes in response to the equally irresolute price action in the US Dollar as investors warm up for the release of the NFP Annual Revision and the speech by the Fed’s Warsh at the Jackson Hole Symposium, both events due on Friday.

Gold recovers $4,600, buyers unwilling to give up

Gold adds to Wednesday’s pullback, although it manages to pick up some pace and come closer to the $4,600 mark per troy ounce on Thursday. In the meantime, the yellow metal remains on the back foot despite the widespread caution and the lack of clear direction of the US Dollar.

Ripple rebounds as whales accumulate 460 million XRP

Ripple (XRP) holds above $1.40 support on Wednesday, as bulls return to take control following three consecutive days of declines. The remittance token’s upside appears capped at $1.50 while extended gains would face additional resistance at $1.70. A break above $2.00 would mark a potential regime shift from bearish to bullish.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.

Kevin Warsh’s Jackson Hole dilemma: Say too much, too little, or just enough

Kevin Warsh is preparing to deliver his first Jackson Hole speech as Federal Reserve (Fed) Chair on Friday, and expectations extend well beyond whether interest rates will be raised or left unchanged in September.