USD/IDR: Positive above 13,700 ahead of Bank Indonesia rate decision
- USD/IDR fails to hold onto weakness.
- PBOC rate cuts, coronavirus updates flash mixed signals.
- Downbeat fundamentals, signals from BI indicate a rate cut.
USD/IDR seesaws near 13,735, +0.15%, during the early trading session on Thursday. The quote has been respecting the broad US dollar gains while also taking clues from China ahead of the Bank Indonesia (BI) Rate decision.
The Asian currency has been responding to the Chinese catalysts off-late wherein coronavirus cases just followed the re-revised method while the People’s Bank of China (PBOC) announced Interest Rate Cut.
On Wednesday, Reuters released a poll suggesting “Sixteen of 28 economists in the survey expected BI to cut the benchmark 7-day reverse repurchase rate by 25 basis points (bps) to 4.75%.”
On the other hand, Enrico Tanuwidjaja, Economist at UOB Group, highlighted the Indonesian deficit to cite the coronavirus risk. The analyst said, “Indonesia trade balance posted a large deficit of USD864.2mn in January 2020, as exports to Indonesia key trading partner – China dropped amidst impact from the novel coronavirus (COVID19) outbreak, which more than offset the decline in imports.”
It should also be noted that downbeat performance of Indonesia Trade Balance, Retail Sales previously confronted with the Indonesian Finance Minister Sri Mulyani Indrawati’s signals for further government spending.
While a rate cut should ideally push the USD/IDR upwards, no cases of coronavirus in Indonesia and risk-on in Asia might confine the pair’s advances.
Technical Analysis
Unless crossing a 50-day SMA level of 13,785, USD/IDR is less likely to avoid the odds that favor declines to the monthly low near 13,585.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
