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On October 30th, the Bank of Japan (BOJ) voted 7-2 to keep its short-term interest rate unchanged at 0.5%, with board members Hajime Takada and Naoki Tamura voting against a rate hike. The BOJs inflation expectations remained stable, while economic growth expectations rose moderately, demonstrating its patience in the face of trade and global uncertainties. In explaining their dissent, Takada stated that Japan had "moved out of deflationary norms" and had largely achieved its price stability target, while Tamura pointed out that "upside risks to prices" brought policy closer to a neutral level. However, the majority chose to remain patient, emphasizing the need for clearer confirmation that wage growth and inflation are sustainably aligned. Policymakers described exports and output as stagnant, with consumption remaining robust despite external headwinds. In its quarterly report, the BOJ stated that underlying inflation may stall in the near term amid slowing economic growth but should gradually stabilize to a level consistent with its 2% target for fiscal year 2027. The board considered economic risks to the downside, while inflation risks were broadly balanced. Uncertainty surrounding trade policy and its potential spillover effects on global prices and markets were key risks requiring vigilance.On October 30th, the Bank of Japan (BOJ) paused its interest rate hikes on Thursday but reiterated that it would continue to increase borrowing costs if the economy performs as it expects. As widely anticipated, the BOJ kept its short-term interest rate unchanged at 0.5%. BOJ board members Naoki Tamura and Hajime Takada opposed the decision, reiterating their September recommendation to raise the rate to 0.75%.The Bank of Japan: There are risks to the future trends of exchange rates and import prices, including international commodity prices.Bank of Japan: Trade policies announced so far may trigger a shift in globalization trends.Bank of Japan: It is worth noting that recent fiscal expansion measures, especially in the United States and Europe, may increase global economic risks.

Rupiah Rebounds Again Above $14,500 Amid Disappointing Indonesia Retail Sales

Alina Haynes

Jun 10, 2022 14:20

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USD/IDR pares weekly gains at $14,570 despite Indonesia Retail Sales falling in April, according to Friday's data. The current weakening in the Indonesia Rupiah (IDR) pair may be attributable to the broad dollar retreat ahead of the US Consumer Price Index (CPI) for May.

 

According to the most recent report from Bank Indonesia, the nation's Retail Sales slowed to 8.5% in April, down from 9.3% in the previous report.

 

In spite of this, the US Dollar Index (DXY) pares its largest daily advances in a week due to apprehension around the release of vital inflation data.

 

Notably, however, fresh covid worries in China owing to the restoration of activity limitations in Shanghai and Beijing threaten Asian market mood. "Only ten days after a citywide lockdown was lifted, Shanghai's citizens will be subjected to an unexpected round of COVID-19 testing this weekend, unnerving locals and increasing fears about the impact on business," said Reuters.

 

On a larger scale, growing worries of faster/heavier rate rises and their negative economic ramifications appear to be weighing on the performance of the market as of late. Among the additional reasons that challenge the USD/IDR bears are the escalating fears about inflation and the Russia-Ukraine conflict.

 

Moving forward, it will be crucial to monitor the US CPI, which is anticipated to remain unchanged at roughly 8.5% YoY, since the White House has previously predicted a higher number, which might remember USD/IDR bulls.

 

Technical Evaluation

 

Despite the most recent dip, USD/IDR maintains the early week's comeback from the 100-day simple moving average (about $14,420 at press time), which keeps purchasers optimistic.


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