HALISTER1: Rupiah May Still Benefit From a BI Rate Cut on Inflows: Analysis

Rupiah May Still Benefit From a BI Rate Cut on Inflows: Analysis

(Bloomberg) -- Even if the Indonesian central bank cuts reference rate tomorrow, rupiah could still advance to 13,000 per dollar in near term, as bond and stock inflows continue, Bloomberg strategist Andrew Robinson writes.
  • Central bank will cut reference rate by 25 bps to 6.25%, according to majority of economists in Bloomberg survey; 5 out of 9 see a cut while remainder forecast no change
    • This would be the fifth cut this year; announcement due tomorrow
  • Indonesian govt bonds and stocks have seen inflows of about $11b this year
    • Inflows into stocks and bonds so far this year are highest since 2014
    • 10-year IDR govt bond yield of 6.84% compares with 3.531% for MYR and 1.417% for KRW
  • USD/IDR could drop to 13,000 level in near term; FX pair is below both cloud and base and conversion lines on ichimoku chart, which are bearish signals
  • USD/IDR up 0.1% at 13,114 today; FX pair last traded below 13,000 on March 7
  • NOTE: Andrew Robinson is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice
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