USD/IDR: Indonesia rupiah slips as inflation points to a rate cut

July 03, 2023 09:25 PM AEST | By Invezz

USD/IDR: Indonesia rupiah slips as inflation points to a rate cut — Image source: Invezz

Indonesia consumer inflation data

One of the top forex news on Monday was the latest Indonesia consumer inflation data. According to the statistics agency, the headline consumer price index rose by 0.14% on a month-on-month basis in June.

This increase translated to a year-on-year increase of 3.52%, lower than the previous increase of 4.0%. Economists were expecting the inflation figure to come in at 3.64%. At the same time, core inflation, which excludes the volatile food and energy products, declined to 2.58% from the previous 2.6%.

Therefore, these numbers mean that the Indonesian central bank will maintain its interest rates intact when it meets later this month. Most analysts also believe that the bank will decide to cut rates later this year. Besides, inflation has already moved to its target band of between 2% and 4%, as I wrote here.

The Bank of Indonesia decided to leave interest rates unchanged at 5.75% in June and hinted that it will leave them intact for the rest of the year. Still, with the economic growth slowing, there is a likelihood that the bank will cut rates in the fourth quarter.

USD/IDR technical analysis

USD/IDR chart by TradingView

The USD to Indonesia rupiah price has staged a strong recovery after bottoming at 14,612 in June. As it recovered, the pair moved above the important resistance point at 14,841, the lowest level on February 2nd.

The USD/IDR price has also moved above the 25-day and 50-day moving averages. The two averages made a bullish crossover pattern. It is now attempting to move above the key resistance point at 15,048.

Therefore, the pair will likely continue rising as buyers target the next psychological level at 15,100. A move below the psychological level of 15,000 will invalidate the bullish view.

The post USD/IDR: Indonesia rupiah slips as inflation points to a rate cut appeared first on Invezz.

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