Asian FX Focus: IDR Orthodox and unorthodox surprises

Research evidence excerpt

Asian FX Focus: IDR Orthodox and unorthodox surprises

21 May 2026

Asian FX Focus: IDR CurrenciesIndonesia

Orthodox and unorthodox surprises

◆ The IDR’s depreciation is due to capital outflows on domestic Joey Chew

issues, exacerbated by recent external adversities HeadThe Hongkongof Asia FXandResearchShanghai Banking Corporation Limited,

Singapore Branch

◆ Without a fall in oil prices and US yields, BI’s intervention and joey.s.chew@hsbc.com.sg

+65 6658 5186

rate hikes will likely slow but not reverse the IDR’s decline…

Jingyang Chen

Asian FX Strategist

◆ …amid an ongoing MSCI review, dividend season, and The Hongkong and Shanghai Banking Corporation Limited

jingyang.chen@hsbc.com.hk

uncertainty about the centralisation of commodity exports +852 2996 6558

Paul Mackel

Global Head of FX Research

Bank Indonesia (BI) hiked its policy rate by 50bp to 5.25% on 20 May to stem the The Hongkong and Shanghai Banking Corporation Limited

IDR’s depreciation (nearly 5% since the Middle East conflict started). The sharp rise paulmackel@hsbc.com

+852 2288 5523

in US yields over the past week was probably the main trigger, although BI’s

tightening bias was already apparent from how SRBI yields rose by over 130bp over

the past three months (6m: 6.2%) as BI ramped up issuance (Chart 1).

Higher SRBI yields recently did induce inflows from foreigners (USD2.8bn in April;

Chart 2), but it was not enough to offset the large FX demand from elsewhere, such

as from foreign investors selling Indonesian equities (USD2.4bn in March-April) and

repatriating dividend income (April-July; Chart 3 and Chart 4), residents accumulating

FX deposits onshore (USD4.5bn in March; Chart 5) and other FX assets offshore

(Chart 6), companies importing capital equipment (25% y-o-y growth – the main