USD/IDR Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average and lacks a clear driver.
Key drivers:
- Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with Bank Indonesia's dovish policy, creating pressure on the Indonesian Rupiah.
- Risk/commodities: A generally weaker global appetite for emerging market currencies is reflected in the recent decline of the IDR, further fueled by capital outflows from Indonesian bonds.
- One macro factor: Indonesia's economy is impacted by slower-than-expected recovery in China, which has affected its exports and foreign exchange reserves.
Range:
The USD/IDR is expected to hold steady within the recent range, exhibiting minor fluctuations.
What could change it:
- Upside risk: A significant improvement in US economic data could enhance demand for USD.
- Downside risk: Rising political uncertainty in Indonesia may further hinder confidence in the Rupiah.
