USD/IDR Outlook: The outlook for USD/IDR is likely to move sideways as the rate hovers around its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The US Federal Reserve is expected to cut rates, while Bank Indonesia has already reduced its benchmark rate, which impacts the interest rate differential favoring the IDR.
• Risk/commodities: Oil prices are slightly below average, which could pressure the Indonesian economy that relies on commodity exports.
• One macro factor: The prospective repatriation of US dollars by Indonesian nationals may support the IDR, although it remains uncertain how effectively this will be realized.
Range: USD/IDR is expected to hold in its recent range, as volatility remains low and trading conditions are stable.
What could change it:
• Upside risk: A sharp increase in global oil prices could bolster the IDR.
• Downside risk: Escalation of geopolitical tensions involving the US could weaken the USD further, impacting the balance.
