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Rupiah, Rupee Short Bets Retreat as Oil Drops, Policy Steps Help
Short positions on the Indonesian rupiah and Indian rupee fell from multi-month highs, a Reuters poll showed, as lower oil prices and central bank measures attracted inflows.
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Short bets on the Indonesian rupiah and the Indian rupee fell from multi-month peaks, a Reuters poll of 15 analysts and fund managers showed Thursday. Lower oil prices and central bank steps to attract foreign capital eased selling pressure.
The poll, conducted May 9–14, showed rupiah short positions at their lowest since early March. Rupee shorts also retreated. They remained elevated relative to recent history.
Oil prices fell roughly 10% from April highs. India imports about 85% of its crude. Indonesia is a net importer of oil products. The decline directly reduces import costs, lowering the need for dollar buying by state-run refiners. That buying had been a steady source of currency pressure. The poll attributed part of the short retreat to lower oil.
Central bank policy also helped. Bank Indonesia raised its benchmark rate in April to 6.25% and has been intervening in spot and forward markets to support the rupiah. The Reserve Bank of India used sell-buy swaps – selling dollars in the spot market while agreeing to buy them back later – to manage rupee liquidity. The RBI also eased rules for foreign portfolio investment in government bonds to attract inflows. Analysts surveyed by Reuters said those measures stabilized expectations.
The shift may be fragile. The poll was conducted before the latest oil uptick. Since then, Brent crude has edged back above $83 a barrel. The dollar remains strong, with the DXY near 105. A hawkish Fed or a rebound in oil could quickly reverse the positioning, several analysts said.
Positioning is a lagging indicator. Short bets reflect what traders have already priced in, not the next catalyst. The rupiah and rupee will move on oil and the Fed. If Brent stays below $80 and the Fed signals a rate cut later this year, pressure on both currencies could ease further, analysts said. A rebound in oil or a hawkish Fed hold would rebuild short bets, they said.
Next concrete markers include OPEC+ supply decisions in early June, the US PCE inflation print on May 31, and policy meetings at Bank Indonesia on June 19 and the RBI on June 5. Each event will test whether the recent improvement is durable.