EUR/IDR Outlook:
The EUR/IDR rate is slightly positive but likely to move sideways, trading just above its recent average and near the lower end of the 3-month range. Recent developments have not provided strong directional support for a significant shift.
Key drivers:
• Rate gap: The European Central Bank's neutral stance contrasts with Bank Indonesia's efforts to stabilize the undervalued rupiah.
• Risk/commodities: Oil prices are at recent highs, which typically supports the euro, given its impact on import costs, but this is counterbalanced by pressures on the rupiah.
• One macro factor: The implementation of Indonesia's new export foreign exchange policy aims to strengthen the rupiah but faces challenges from global market dynamics.
Range:
EUR/IDR is likely to drift within the stable recent range of 19289 to 20087.
What could change it:
• Upside risk: A positive economic surprise from the Eurozone could boost the euro further.
• Downside risk: Continued weakness in the rupiah due to external pressures could further limit the euro's gains against it.
