InvestIdeas

Indonesia rupiah swoons to 17-year low
http://www.cnbc.com/id/102461781

Rupiah Falls to Weakest Level Since 1998 as Funds Sell Stocks
http://www.bloomberg.com/news/articles/ ... ell-stocks

This currency has lost 97% of its value against the US dollar

By Tim Staermose

Source: Sovereign Man

http://www.thetradingreport.com/2015/08 ... us-dollar/

indonesian-rupiah-rout-swells-cost-of-304-billion-foreign-debt
http://www.bloomberg.com/news/articles/ ... reign-debt

not vested

Oct 14, 2015

Morgan Stanley: Indonesia Rupiah’s Rally Won’t Last By Shuli Ren

Along with other high-yielding currencies, the Indonesian rupiah surged to a 4-month high on bets that the Federal Reserve won’t raise rates this year.

As of yesterday’s close, the rupiah has already gained 7% this month, boosting the iShares MSCI Indonesia ETF (EIDO) to 17.4% gain in October.

But Morgan Stanley‘s Kritika Kashyap and team think the rupiah’s rally will lose steam soon, in part because it was the result of hurried short covering. The rupiah was sold off heavily in the third-quarter, down over 10%.

The analysts wrote:

A look at BI’s weekly balance sheet confirms a significant tightening in reserve money/monetary base in the last week of September by IDR 58.5 trillion (~US$4 billion). On the assets side, BI’s net foreign assets fell by IDR 20 trillion (~US$1.4 billion) in the same week.

Not only did system liquidity tighten in the last week of September, but offshore IDR market liquidity was also thin. While liquidity data are not easily available for NDFs, volume data from DTCC (clearing company) shows that NDF liquidity at the beginning of October was almost 50% lower than September.

Anecdotal evidence from brokers also suggests that daily trading volumes last week averaged between US$300 million and US$400 million compared to usual trading volumes of ~US$500-600 million.

Thin liquidity, in addition to the heavy short positioning in IDR, exaggerated the price action, as stops were triggered and shorts squeezed out given the high carry.

In addition, while acknowledging that structural reforms were gaining momentum, Morgan Stanley said on a real effective exchange rate basis, rupiah was no longer undervalued.

The bank maintains its year-end target of 14,000 per dollar. The rupiah rose 2.4% trading at 13,296 recently.


Source: Barron's Asia

HSBC Makes Case For Indonesia’s Rupiah

By Shuli Ren

Rupiah remains a positive story because Indonesia is committed to structural reforms and its central bank is not crazy:

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... as-rupiah/

Rupiah’s Five Year of Losses Seen Ending by Top Forecaster
http://www.bloomberg.com/news/articles/ ... on-inflows

HOT MONEY HEADACHE

Indonesian markets also dived in early trade. Indonesia has enjoyed relatively high inflows into stocks and bonds markets in the past few months, making it vulnerable to hot money outflows at times of uncertainty.

The rupiah IDR=ID fell as much as 2.7 percent, while Jakarta Composite Index .JKSE fell as much as 3.2 percent to its lowest since Sept 16.

Bank Indonesia (BI) sold dollars to stabilize the currency, traders said, but it still fell to a four-month low.

Nanang Hendarsah, an official at BI, said the rupiah's sharp drop was caused by sudden hedging activity in the NDF market, but noted outflows from Indonesian markets were contained so far.

Yield of Indonesia's 10-year government bonds jumped on Friday to 7.462 percent from 7.417 percent. Foreigners own 38.4 percent of outstanding Indonesian government bonds.

Source: Reuters

Chart of the day: Eyes on Indonesia

by Nicole Elliott

On October 19, Bank Indonesia kept its key seven-day reverse repurchase rate unchanged at 4.25 per cent following two consecutive 25-basis-point cuts in August and September.

What is interesting is that standing pat has caused an acceleration in recent rupiah weakness against the US dollar.

Volume and observed volatility have increased as the exchange rate pulls away from its 200-day moving average at 13,370. On Friday, we closed exactly on Fibonacci retracement resistance at 13,600, triggering a buy signal in the parabolic stop-and-reverse indicator.

A break higher is possible this week as September’s hammer candle has added bullish momentum for the US dollar, as would a break above the May and June highs at 13,700.

Source: SCMP

http://www.scmp.com/business/markets/ar ... -indonesia