ASEAN Outlook Talking Points – Indonesian CPI, Fed, Auto Tariffs
- Philippine and Indonesian central banks took action to bolster PHP and IDR respectively
- Ahead, ASEAN currencies could face pressure from rising USD[1] on Fed, BoE and EU CPI
- The remaining threat of US auto import tariffs, for at least a month, could dampen sentiment
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A US Dollar[3] that finished cautiously higher last week combined with a lack of key ASEAN economic data allowed currencies like the Singapore Dollar and Malaysian Ringgit to trade little changed. Meanwhile, the Philippine Peso edged slightly higher against its US counterpart. It was boosted by intervention from the Philippine central bank. In fact, looking at the chart below, you can see the BSP spending foreign exchange reserves to help prevent aggressive depreciation of its currency.
Another strong performer was the Indonesian Rupiah which got a boost from weaker US GDP data and updates from the Bank of Indonesia (BI). Going forward, the BI is introducing new measures aimed at attracting foreign investors according to Governor Perry Warjiyo. This includes a new overnight rate that will be transaction-based and making swap pricing “more attractive”.
While on the topic of the Rupiah, next week we will get Indonesia’s July CPI report. Last week, the Bank of Indonesia forecasted inflation at 3.16% y/y which would be an uptick from 3.12% in June. The country has been experiencing disinflation since mid-2017. The recent rise in overnight lending rates,
