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Rupiah poised for relief as dollar softens and long yields cool
Bank Indonesia held its policy rate at 5.75% and leaned on tools like FX hedging incentives and SRBI to support currency stability.
OCBC strategists Sim Moh Siong and Christopher Wong said the Indonesian rupiah (IDR) should find some relief as the US dollar softens and long end US Treasury yields pull back. They pointed to Bank Indonesia focus on keeping the IDR stable rather than pushing interest rates higher.
Bank Indonesia kept its policy rate unchanged at 5.75% and increasingly uses non rate measures, including FX hedging incentives and SRBI, to help support the currency. The strategists also said the decision reinforced policy continuity under acting Governor Destry Damayanti.
On the technical side, USD/IDR shows bearish momentum, last closing around 17830. OCBC flagged support at 17760 and 16630, with resistance at 17940, noting that two way trading is likely while RSI is flat.
The strategists added that IDR may benefit from any further pullback in long dated yields and a softer USD, alongside BI efforts to attract foreign inflows and deepen FX market liquidity.