USD/IDR remains under pressure ahead of Bank Indonesia rate decision

• USD/IDR stays below 14,000 ahead of likely no rate change from the BI.
• President’s optimistic plans and upcoming bills increase the hopes of a revival in the Asian economy. Policymakers, recent data suggest otherwise.

While extending the previous day’s declines, USD/IDR trades near 13,960 during early Thursday.

The pair has recently benefited from the US-China trade sentiment while expectations of a no rate cut from the Bank Indonesia (BI) might also have played their role.

Recently released Indonesian Retail Sales have been disappointing whereas BI’s Deputy Governor Dody Budi Waluyo showed readiness for further rate cuts after this year’s four such actions.

On the contrary, Indonesian President Joko Widodo is pushing hard for a $33 billion project to move the capital city from Jakarta to forested Borneo island so that the new "Silicon Valley"-like the city could be ready by 2023, as per the New York Times. Further, Reuters cites two upcoming two omnibus laws that could help the Asian economy to revive.

Ahead of the event, TD Securities and Reuters were the leaders to suggest that the BI will not announce any rate change in its last meeting of 2019. “A downside inflation surprise in November and firmer IDR need to be weighed against an increased emphasis on macroprudential measures, which we think will allow BI to be patient, waiting until early next year to ease policy again,” says TD Securities.

Other than the BI, global trade and political headlines are likely to drive the USD/IDR pair’s near-term moves.

Technical Analysis

Lows marked in September and July, surrounding 13,880, will keep limiting pair’s downside whereas 200-day Simple Moving Average (SMA) around 14,155 acts as the near-term key resistance.