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  • USD/IDR continues to consolidate in a narrow range. 
  • Indonesia’s central bank expects the rupiah to revisit pre-coronavirus pandemic levels. 

The Indonesian rupiah is trading in the sideways manner around 14,760 at press time. The currency has been restricted to a narrow range of 14,740-14,780 since May 22. 

The consolidation is preceded by an uptrend from 16,737 per US dollar to 14,735 per US dollar. Indonesia’s central bank thinks the currency has the potential to rise back to pre-coronavirus pandemic levels of around 13,600 to 13,800 per US dollar. 

Central bank’s head Warjiyo said on Thursday that the credit default swap has dropped since the market panic and may decline further, and once risk appetite returns to normal, the IDR would strengthen to reflect its fundamentals. So far, however, Warjioy’s comments have failed to entice the IDR bulls. 

That said, the pair could soon witness an increase in volatility as a prolonged period of low volatility range-bound action, similar to the one we are witnessing currently, often ends up in a big move in either direction. 

Technical levels