Indonesian Rupiah: Limited relief, challenging backdrop – OCBC

Christopher Wong at OCBC expects the Indonesian Rupiah (IDR) to see some near-term relief from softer United States (US) payrolls and a wider trade surplus, with policymakers emphasizing IDR stability. However, elevated long-end US Treasury yields and high Brent prices keep the external backdrop challenging, suggesting only modest USD/IDR pullback unless US yields and Oil move clearly lower.

Recovery needs yields and Oil lower

"IDR may find some near-term relief in the open following softer US payrolls last Fri, while Indonesia’s wider-than-expected August trade surplus provides an additional buffer. However, the improvement in the trade balance was partly due to weaker-than-expected imports and may not yet signal a sustained improvement in the external position."

"Domestically, policymakers continue to signal a focus on IDR stability. BI stressed that the shift towards greater use of derivatives does not represent a reduction in the intensity of its FX stabilisation efforts, while the Ministry of Finance highlighted coordination with BI and the importance of maintaining SBN attractiveness."

"Near term, there may be room for some IDR recovery, particularly given relatively bearish positioning, but a more sustained move would likely require a clearer moderation in US yields and oil prices."

"USD/IDR last closed at 17875. Mild bullish momentum shows signs of moderation while RSI fell. Room for retracement. Support at 17820/40 levels (50, 100 DMAs, 23.6% fibo retracement of 2026 low to high), 17760 (21 DMA). Resistance at 17950, 18000 levels."