Home›Forex›EM Currencies›Rupiah risk rises as US yields and outflows erode rate…

Rupiah risk rises as US yields and outflows erode rate support

MUFG says Bank Indonesia has leaned on non-rate stabilisation tools like cheaper FX hedging, but renewed foreign portfolio outflows and weaker trade-balance prospects keep near-term Rupiah pressure intact.

Reported · Written up by our desk · EM Currencies

MUFG’s Lloyd Chan warned that the Indonesian rupiah remains exposed after US yields moved higher, eroding Indonesia’s relative rate support, according to FXStreet.

FXStreet reports that Bank Indonesia has shifted away from additional rate hikes toward non-rate stabilisation tools, including cheaper FX hedging, but Chan cautioned that renewed foreign portfolio outflows and prospects for weaker trade balances suggest underlying Rupiah pressure will persist in the near term.

The note also links the broader currency pressure to a US backdrop of elevated yields and a stronger US dollar, factors that can weigh on emerging-market FX as investors rebalance.

FXStreet adds that the discussion comes as US yields hold near multi-year highs, with inflation risks tied to higher oil prices and growing expectations for an October Fed rate hike.

More like this

Sources