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23 Sep 2014
USD/IDR risks skewed to the upside - Westpac
FXStreet (Bali) - Westpac expects further upward pressure in USD/IDR.
Key Quotes
"We continue to see USD/IDR risks skewed to the upside. Last week saw the largest foreign outflow from local equities since late last year. The bigger risk is outflows from the local bond market and there isn't any evidence of this happening yet. Still, foreign investors are likely to be increasing their hedges, which can still bias USD/IDR higher."
"BI also hasn't rebuilt its FX reserve position to the same degree that the RBI has, which leaves the central bank with less flexibility in terms of dealing with fresh currency weakness. Weaker commodity demand from China will also present a headwind to Indonesia as it tries to address its current account deficit."
"Well over 50% of Indonesia's exports to China are commodity denominated, which is far greater than all over EM Asia economies. A push through the 12300 is possible in terms of the 1 month NDF."
Key Quotes
"We continue to see USD/IDR risks skewed to the upside. Last week saw the largest foreign outflow from local equities since late last year. The bigger risk is outflows from the local bond market and there isn't any evidence of this happening yet. Still, foreign investors are likely to be increasing their hedges, which can still bias USD/IDR higher."
"BI also hasn't rebuilt its FX reserve position to the same degree that the RBI has, which leaves the central bank with less flexibility in terms of dealing with fresh currency weakness. Weaker commodity demand from China will also present a headwind to Indonesia as it tries to address its current account deficit."
"Well over 50% of Indonesia's exports to China are commodity denominated, which is far greater than all over EM Asia economies. A push through the 12300 is possible in terms of the 1 month NDF."