Forex
Home›Forex›EM Currencies›Rupiah outlook faces intervention risk near USD/IDR 18…
Rupiah outlook faces intervention risk near USD/IDR 18,000
DBS notes Indonesia’s sovereign outlook stayed stable after S&P, but a weaker rupiah around 18,000 and a flatter IDR yield curve are limiting upside for local asset rallies.
FXStreet, citing DBS Group Research, said S&P Global Ratings retained Indonesia’s sovereign rating and stable outlook, pointing to the country’s record of fiscal discipline and expectations that flagship spending will be rationalized alongside improved revenues.
Still, DBS cautioned that sentiment for local assets is being held back by renewed West Asia tensions, higher US yields, and a weaker rupiah, with USD/IDR back above 18,000.
The note also flagged market stress effects on local rates, saying the IDR 2-year yield has risen by nearly 200 basis points more than the long end, flattening the yield curve.
DBS concluded that unless exogenous pressures ease, any meaningful rally in local markets is likely to be short lived, with intervention risk rising as USD/IDR stays near new rupiah lows.