Home›Forex›EM Currencies›USD/IDR nears all-time highs as S&P keeps Indonesia ou…

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.

Reported · Written up by our desk · EM Currencies

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.

Latest closeWTI crude $79.90 ▲2.2%

More like this

Sources