Indonesian Rupiah: Rate support erodes as outflows resume – MUFG
MUFG’s Lloyd Chan warns that the Indonesian Rupiah remains exposed as US yield increases erode Indonesia’s rate support.
The Indonesian Rupiah continues to face pressure despite the Indonesian central bank shifting its focus from rate hikes to non-rate stabilisation tools, such as cheaper FX hedging for portfolio investors. This weakening is attributed to the rise in US yields and renewed foreign portfolio outflows, which indicate persistent underlying Rupiah stress in the near term.
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