EM FI/FX Strategy: Asia: Four things to watch in the coming week

Research evidence excerpt

EM FI/FX Strategy: Asia: Four things to watch in the coming week

Global Research

15 June 2026ab

EM FI/FX Strategy Emerging Markets

Asia EmergingAsia: Four things to watch in the coming week

Teck Quan Koh

Strategist

Bank Indonesia rate decision (18-Jun) and ongoing protests teck-quan.koh@ubs.com

+65-6495 4416

UBS expects Bank Indonesia to raise the policy rate by 25bp to 5.75%, following last

week’s off-cycle move and the 50bp hike in May. It's a close call though, especially after Rohit Arora

StrategistUSD/IDR pulled back from the highs. Nonetheless, recent BI rate hikes have signalled

rohit-b.arora@ubs.com

policymakers’ intent to address the rupiah weakness, though the key question is +65-6495 5232

whether it will be sufficient. We think not. More rate hikes will be needed in our view,

especially amidst the ongoing deterioration in CA Balance (notably the April goods Grace Lim

Economist

balance tightened to post pandemic lows), suggesting to us that the policy rate may

grace-k.lim@ubs.com

need to rise above 6% for IDR to stabilize (let alone a sustained appreciation). +65-6495 5965

Meanwhile, protests in Jakarta over the weekend, reportedly linked to concerns around

government spending, also highlight rising domestic pressure on fiscal policy. We stay

long USD/IDR and recommend using the ongoing global risk/energy reprieve as an

opportunity to add to structural USD/IDR longs.

BSP Rate decision (18-Jun)

UBS expects the BSP to raise the policy rate by 25bp to 6.50% at the June 18 meeting.

Although May CPI surprised lower at 6.8% y/y (from 7.2% in April), underlying inflation

pressures remain firm, with elevated fuel costs feeding through to utilities and food

(8.9% y/y rise in electricity prices, 6% y/y food inflation), supporting continued policy

tightening.