USD/IDR: Rupiah holds near weekly tops on Bank Indonesia’s status-quo

At its June monetary policy meeting on Thursday, Indonesia’s central bank, Bank Indonesia (BI), left its 7-day reverse repo rate unchanged at 6.00%, meeting the market expectations.

The latest Reuters poll showed that 19 of 22 analysts polled predicted Bank Indonesia (BI) will hold the benchmark rate at 6.0%, where it has been since November. The remaining three forecasted a 25-basis point rate cut. 

The central bank Governor noted that the escalation of trade war affects global economic dynamics, lowering global trade volume and hurting global growth. He added that he sees Q2 GDP growth flattening.

Additional Comments:

Efforts to support domestic consumption need to be taken to mitigate downside risk of slowing global growth.

2019 economic growth seen below midpoint of 5.0-5.4% outlook range.

Q2 surplus in financial accounts in balance of payments seen bigger than initially expected.

2019 C/A seen below 2018's level, in a range of 2.5%-3% of GDP.

Y/Y inflation at end-2019 seen below midpoint of 2.5-4.5% target range.

There is room to boost credit growth without hurting financial system stability.

On the status-quo decision by the Indonesian central bank, the Indonesian Rupiah (IDR) remained unfazed and kept its range near fresh weekly highs reached against its American counterpart, with the USD/IDR cross looks to attempt a tepid recovery near 14,230 points.

USD/IDR Technical Levels

“Sustained break of 14,203 support level comprising 100-day simple moving average (SMA) can fetch the quote down to June low near 14,157 and then towards April month bottom around 13,974. On the upside, 21-day SMA at 14,273 and 14,293 comprising 50-day SMA limits the pair’s immediate advances, a break of which can again propel the quote in the direction to 200-DMA level of 14,431,” FXStreet’s Analyst Anil Panchal notes.