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

20 July 2026ab

EM FI/FX Strategy Emerging Markets

Asia EmergingAsia: Four things to watch in the coming week

Teck Quan Koh

Strategist

BI rate decision (22-Jul) teck-quan.koh@ubs.com

+65-6495 4416

UBS expects Bank Indonesia (BI) to keep its policy rate unchanged at 5.75%. This

meeting is likely to be a close call, with market expectations evenly split between a hold Rohit Arora

Strategistand a 25bp hike, reflecting BI’s trade-off between supporting growth and stabilising the

rohit-b.arora@ubs.com

rupiah. We expect BI to remain on hold, as pressure from elevated oil prices has eased +65-6495 5232

from elevated levels and the fiscal outlook has improved modestly following expenditure

rationalisation, including spending cuts to the flagship free meal programme. That said, Grace Lim

Economist

Indonesia’s weakening external balance, limited FX carry attractiveness, and relatively

grace-k.lim@ubs.com

low FX risk premium in IndoGBs suggest that current policy settings remain insufficient +65-6495 5965

to achieve a sustained stabilisation of the rupiah. We thus maintain the view of a gradual

IDR weakness and see USDIDR trading closer to the 18,500 - 19,000 range later this

year. The key risk to our bearish IDR view is a more aggressive tightening cycle from BI,

particularly if BI delivers consecutive rate hikes and demonstrates a stronger

commitment to FX stability.

Taiwan equity outflows

Taiwan equities recorded their largest single-day outflow since 24 June, equivalent to a

roughly 6-standard-deviation outflow relative to the past five years. This contrasts

sharply with the recent three-month average outflow of just US$0.4bn and suggests a