FXStreet (Bali) - ANZ Strategists Irene Cheung and Kumar Rachapudi, note that the IDR is likely to remain well bid post election results, in which Jokowi was declared the winner, although they anticipate weakness further down the road.

Key Quotes

"Indonesia’s General Elections Commission (KPU) announced that Joko Widodo (or Jokowi) has won the Presidential election, with 53.15% support vs 46.85% for Prabowo Subianto."

"Not all is settled however. Prabowo said that he will contest the results in the Constitutional Court, which could take up to 24 August to rule, though we do not see merit in his contest."

"Barring major protests, we see near-term downside potential for USD/IDR on the back of the Jokowi victory but expect the pair to rebound further out. We think reforms will take time to be put in place, with Jokowi now saying that fuel subsidy rationalization will take place in the next three years."

"Meanwhile, the current account deficit will weigh on the currency as the new government targets to boost growth to 7% in two years. Also, we see a potential increase in USD hedging needs."

"We recommend buying 6m USD/IDR NDF, if it hits 11,700-11,750 (vs 11,805 currently), targeting 12,200 (stop loss 11,400)."

"On bonds, we expect the confirmed Jokowi win to attract flows into the bond market in the near term."

"We maintain our bullish view on the bond market and continue to suggest investors buy 20y bonds, targeting a move towards 8.25% (Current: 8.68%, re-assess level: 8.95%)."

You May Also Like

COMPANIES IN THIS ARTICLE
Related Forex Analysis
  1. Forex News

    Video: Expectations of EURUSD and USDJPY Breaks Pushed to Next Week

  2. Forex News

    Easing continues in China - BBH

  3. Forex News

    Video: Don’t Set Up for the Dollar, Euro and Equity Breaks Just Yet

  4. Forex News

    Greek political aftermath of referendum - TDS

  5. Forex News

    IMF Offers Bleak Outlook for Greece; Further Debt Writeoff May Be Needed

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!