SGD/IDR Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average, lacking a clear driver.
Key drivers:
• Rate gap: The Monetary Authority of Singapore has shifted towards a more accommodative monetary policy, while Bank Indonesia recently cut rates to stimulate economic growth.
• Risk/commodities: Oil prices are trending lower, which tends to weaken the IDR, particularly as Indonesia is a net oil importer.
• One macro factor: Indonesia's government plans to encourage the return of US dollar holdings from abroad to support the rupiah, amid ongoing economic challenges.
Range: The SGD/IDR is likely to drift within its recent range, showing stability without significant movement towards the extremes.
What could change it:
• Upside risk: A stronger-than-expected economic report from Singapore could push the SGD higher.
• Downside risk: Any escalation in political unrest in Indonesia could contribute to further weakness in the IDR.
