SGD/IDR Outlook:
The SGD/IDR is slightly positive, reflecting its position above the 90-day average and near the upper end of its recent trading range. However, the lack of a clear driver could see it move sideways in the coming weeks.
Key drivers:
• Rate gap: The Monetary Authority of Singapore's accommodative policy contrasts with Bank Indonesia's decision to hold interest rates steady to stabilize the IDR.
• Risk/commodities: Recent volatility in oil prices could impact the IDR, given Indonesia's reliance on oil exports and imports.
• One macro factor: Indonesia's new export foreign exchange policy aims to support the IDR's stability amid currency depreciation concerns.
Range:
The SGD/IDR is likely to hold within its recent 3-month range as both currencies face mixed economic signals.
What could change it:
• Upside risk: Stronger-than-expected GDP growth in Singapore could elevate the SGD further.
• Downside risk: Escalation of political unrest in Indonesia might weaken the IDR considerably.
