Indonesian Rupiah hits record low vs USD on Middle East risks; USD/IDR approaches 17,200
The USD/IDR pair catches aggressive bids during the Asian session on Friday and advances to a fresh all-time peak, around 17,1885-17,190 region in the lar hour. Spot prices remain on track to register strong weekly gains and seem poised to appreciate further.
The Indonesian Rupiah (IDR) continues to underperform on the back of economic risks stemming from the ongoing conflict in the Middle East. As Indonesia is a net Oil importer, the war-driven surge in energy prices has increased the country's import and subsidy costs. Adding to this, geopolitical tensions led to capital outflows from Indonesia's bond and equity markets as investors moved into safer assets, like the US Dollar (USD). This has been a key factor behind the recent move up in the USD/IDR pair witnessed over the past month or so.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, is looking to build on the overnight recovery from its lowest level since late February, due to uncertainty around the Strait of Hormuz. Meanwhile, a 10-day truce between Israel and Lebanon fueled hopes about a potential US-Iran peace deal. This, in turn, remains supportive of a positive risk tone, which, along with diminishing odds for a rate hike by the US Federal Reserve (Fed), keeps a lid on any meaningful appreciation for the USD and might keep a lid on the USD/IDR pair.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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