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USD/IDR nears all-time highs as S&P keeps Indonesia outlook stable
S&P affirmed Indonesia’s BBB sovereign rating with a stable outlook but warned that higher bond yields and a weaker rupiah are headwinds, even as USD/IDR rose 0.3% to 18,105.
Commerzbank analysts cited S&P Global Ratings’ decision to reaffirm Indonesia’s BBB sovereign rating with a stable outlook, pointing to fiscal discipline and adherence to a 3% of GDP statutory deficit ceiling.
They said S&P views Indonesia’s recent fiscal and external deterioration as temporary, with support expected from higher commodity prices and progress on rationalising the free school meal programme.
Still, S&P flagged headwinds for Indonesian assets, including higher bond yields and a weaker Indonesian rupiah, describing a higher interest-to-revenue ratio. Analysts also noted Bank Indonesia’s operational independence and said the sovereign decision was more a removal of a potential headwind than a positive catalyst.
On the currency, USD/IDR rose 0.3% to 18,105, moving toward an all-time high of 18,178 set in early June. FXStreet reported the move reflected a stronger US dollar and higher global crude prices, while Bank Indonesia pledged to go all out to keep the rupiah stable, with a tendency to strengthen.
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