USD/IDR Outlook: Slightly positive, but likely to move sideways as the rate is just above the recent average and lacks a clear driver for further movement.
Key drivers:
• Rate gap: The Federal Reserve's rate cut expectations contrast with Bank Indonesia's recent rate cut, impacting the value of both currencies over time.
• Risk/commodities: Oil prices are stable, which may support the Indonesian economy since it’s a key exporter of commodities, aiding the IDR.
• One macro factor: Indonesia's economy shows resilience with strong manufacturing activity, contributing to a trade surplus, yet it faces declining foreign bond inflows.
Range: The USD/IDR is expected to hold within its recent range, with minor fluctuations rather than sharp moves.
What could change it:
• Upside risk: A significant rise in US inflation could lead to reconsideration of Fed rate cut plans, possibly boosting the USD.
• Downside risk: Continued economic challenges in Indonesia, like declining foreign investment, could pressure the IDR further.
