OCBC’s Sim Moh Siong and Christopher Wong see USD/IDR easing modestly from recent highs, helped by S&P’s rating affirmation and Bank Indonesia’s prior tightening. However, elevated Oil prices, lingering fiscal concerns and still-soft portfolio inflows limit further IDR gains. They highlight 17970/18000 as a cap, with downside supports around 17820/840.

Policy support offsets Oil headwinds

"USD/IDR has eased modestly from recent highs, with the pullback appearing to be driven more by domestic-specific factors than any meaningful weakening in the broader USD."

"S&P’s affirmation of Indonesia’s BBB rating with a stable outlook helped to ease some of the near-term concerns around the sovereign credit story, while BI’s prior tightening and continued willingness to support the IDR have also provided a firmer policy anchor. BI MPC (22 Jul) will be closely watched on whether policymakers tighten further. "

"There may also be some position adjustment after the sharp rise in USD/IDR earlier this month, although there is not yet strong evidence of a sustained pickup in foreign portfolio inflows. "

"We would therefore view the recent IDR recovery more as tentative stabilisation than the start of a stronger appreciation trend. Elevated oil prices remain a key constraint, while lingering fiscal and domestic confidence concerns may still limit the extent of IDR gains."

"USD/IDR was last at 17940 levels. Daily momentum is mild bearish while RSI shows tentative signs of rising. 2-way trades likely for now. If the pair can stay capped under 17970/18000 (21 DMA), then downside pressure may gather momentum with next support at 17820/840 levels (50 DMA, 23.6% fibo retracement of 2026 low to high). Resistance at 18020, 18140 levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)