The USD/IDR exchange rate remained steady on Friday following the release of Indonesia’s GDP data and ahead of the latest US non-farm payrolls (NFP) numbers.
Indonesian Rupiah Continues to Outperform
The Federal Reserve’s decision to hike interest rates by 0.25% in its May meeting was the main forex news impacting the USD/IDR exchange rate. The move pushed the official cash rate to 5.25%, the highest level in over a decade.
Economists anticipate that the latest NFP data will reveal a slowdown in the labor market in April, but the impact on the USD/IDR exchange rate is likely to be limited as the Fed is expected to take a strategic pause from its hiking cycle.
In contrast, the Indonesian rupiah has been one of the best-performing currencies this year, having jumped by 7% since December. The recent release of Indonesia’s GDP data revealed that the economy contracted by 0.92% in the first quarter due to slower growth. However, this decline was better than the median estimate of -1.0%, and on a year-on-year basis, the economy rose by 5.03%.
The USD to IDR price reacted positively to the strong Indonesian GDP data, and the path of least resistance for the Indonesian rupiah is currently higher. The 50-day exponential moving average is supporting the pair’s sell-off, and it has fallen below the 61.8% Fibonacci retracement level. The next level to watch is at 14,430, the 78.6% retracement point.
