ASEAN Outlook Talking Points:
- Indonesian Rupiah put in a comeback versus the US Dollar[1] as anticipated
- ASEAN bloc currencies like PHP, MYR and SGD look to risk trends ahead
- USD/IDR is making downside progress amidst Bank of Indonesia rate hikes
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As expected[3], the Indonesian Rupiah put in an aggressive comeback last week against the US Dollar as its associated central bank raised rates and signaled more are on their way. Bank of Indonesia lifted the 7-day reverse repo rate to 4.75% from 4.50% in an out-of-cycle meeting to help stabilize their currency. Deputy Governor Dody Budi Waluyo noted that they are open to more of those ahead. Meanwhile, the US Dollar took a breather from its rally as risk trends waxed and waned[4].
A lack of key domestic event risk for the greenback in the week ahead places those risks trends as the main catalyst for ASEAN bloc currencies like the Malaysian Ringgit or Singapore Dollar. On this front, escalating trade war fears could be a concern. Last week, the Trump Administration went ahead with allowing metal tariffs to impact imports from Canada, Mexico and the European Union. This almost immediately sparked concern from the impacted countries, igniting prospects of retaliation.
In an environment where said countries follow through with retaliatory tariffs, sentiment is likely to take a hit and have knock-on effects on ASEAN bloc currencies. On this front, we may get updates from Japan’s Prime Minister
