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  • USD/IDR upside run out of steam in the 13770 region on Thursday.
  • The 200-week SMA, today at 13783, offers initial resistance.
  • The BI reduced the policy rate by 25 bps to 4.75% earlier on Thursday.

The Indonesian rupiah is losing further ground in the second half of the week, lifting USD/IDR to as high as the 13770 region, pips below the key 200-week SMA.

USD/IDR higher post-BI decision, USD-buying

The pair climbed to fresh monthly tops arund 13770 earlier in the session and following the decision by the Bank Indonesia (BI) to cut the policy rate by 25 bps, matching markets’ consensus.

In fact, investors have already anticipated the move by the central bank, which aims mainly to contain the negative effects on the economy of the outbreak of the Chinese coronavirus (COVID-19).

In addition, the BI revised lower its forecasts for domestic growth and it now sees the GDP expanding 5.0%-5.4% during the current year (from 5.1%-5.5%). Furthermore, the bank expects the loan growth target at 9%-11% (from 10%-12%)m, while inflation and current account predictions were left unchanged.

Moving forward, the rupiah is expected to remain under scrutiny in light of prospects of further easing by the central bank, particularly following forecasts of lower economic growth and steady inflation.

USD/IDR levels to watch

At the moment, the pair is advancing 0.13% at 13732.0 and faces the next resistance at 13770.0 (monthly high Feb.20) seconded by 13783.9 (200-week SMA) and then 13803.4 (55-day SMA). On the other hand, a drop below 13669.0 (21-day SMA) would aim for 13620.0 (monthly low Feb.6) and finally 13560.0 (2020 low Jan.24).