SGD/IDR Outlook:
The SGD is currently above its recent average and near its recent highs, suggesting a slightly positive outlook but likely to move sideways due to a lack of strong drivers affecting the rate.
Key drivers:
• Rate gap: The Monetary Authority of Singapore maintains a supportive monetary policy, while Bank Indonesia is actively managing interventions, contributing to SGD strength against IDR.
• Risk/commodities: Ongoing trade tensions and global economic pressures have kept volatility in the oil markets, impacting demand for the IDR as investors prefer safer assets.
• One macro factor: Indonesia's fiscal programs and recent political instability have raised concerns among investors, contributing to a weaker IDR.
Range:
The SGD/IDR is expected to hold its current position within the recent trading range, with limited movement towards the extremes.
What could change it:
• Upside risk: Any significant improvement in Singapore's economic indicators could strengthen the SGD further.
• Downside risk: Continued political instability or severe fiscal concerns in Indonesia could further weaken the IDR.
