Indonesian Rupiah: Market tests Indonesia policy credibility – Commerzbank
Commerzbank analysts report that USD/IDR extended gains as investors assessed the appointment of Suahasil Nazara as Indonesia’s new Finance Minister, the third in under two years.
Commerzbank analysts have reported that the USD/IDR currency pair has seen gains as investors gauge the impact of Indonesia's new Finance Minister, Suahasil Nazara. Nazara, a technocrat and fiscal prudence advocate, is Indonesia's third finance minister in less than two years. His appointment follows the abrupt dismissal of Finance Minister Purbaya Yudhi Sadewa, who held the position for about a year.
Despite reassurance from Nazara's profile, markets remain cautious, awaiting evidence of a more credible and predictable fiscal stance. The Jakarta Composite Index recovered from a 2.6% decline to close 0.1% lower, while the 10Y Indonesian government bond yield increased by 1bp to 7.16%, and the USD/IDR 1-month non-deliverable forward remained within the 17,700-17,740 range.
Indonesia's 5Y Credit Default Swap (CDS) spread widened to 83.7bp, indicating that investors continue to await concrete fiscal policy improvements.
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