FOREX DAILY REPORT

Mar 17, 2010

USD/JPY

Yen was down against the dollar toward London open after BOJ acted doubling the scale of a three-month fund supply to banks to Y20 trio, in regards to ease its monetary policy to beat deflation. It fell to 90.69 level, reversed its gain earlier from 90.02 hit before BOJ announcement. Some yen option-related selling also seen from hedge fund since 90 low level. Yen also down against the euro, hit 125.00 from 124.07 earlier, dragged by lower yen against the dollar. News of S&P removed its credit negative watch to Greece also seen to put Yen even under pressure against the euro.

Forecast:

Yen might be kept under pressure in overnight trade, but range will be limited with repatriation flows remain intact capping the currency's loss against the major currencies. US data released later on the day is Producer Price, but with unchanged outlook from Fed on its monetary policy, we suspect effect from this data will be marginal. Expected range: 90.30-91.30

USD/IDR

The pair was opened at 9155, in line with dollar weak elsewhere IDR is also benefitted from the sentiment, it got stronger since early trade triggered by aggressive offshore players' selling. Most inflows still went to local stocks (JKSE +3.25%), bonds and also SBI market. While BI decision to shift from short term SBI to longer ones doesn't seem to ease demand for SBI. BI data showed, offshore holdings on SBI hit IDR 66.03 trio, which was the highest since January 2010. IDR hit the high of 9100 in midday trading before coming back to 9117 toward market closing. It seemed state banks defended IDR's gain in order to prevent the currency moved rapidly; some corporate demands also seen limited IDR's gain around 9100 low level.