USD/IDR Outlook:
The USD/IDR is likely to move sideways as it is currently near its 90-day average and within a stable range. The recent strength of the US dollar has been off-set by domestic economic factors in Indonesia.
Key drivers:
• Rate gap: The Federal Reserve's interest rate adjustments have supported the USD, while Bank Indonesia's rate stability aims to uphold the IDR in light of currency concerns.
• Risk/commodities: As oil prices continue their upward trend, the IDR may feel pressure due to Indonesia's reliance on oil imports, which can widen the trade deficit.
• One macro factor: Bank Indonesia has maintained its benchmark interest rate amid concerns over the undervalued rupiah, indicating government efforts to stabilize the currency.
Range:
Expect the USD/IDR to test the recent mid-range but exhibit limited movement given the current economic signals.
What could change it:
• Upside risk: A significant rise in US economic performance could strengthen the USD further.
• Downside risk: Increased volatility in the Indonesian financial markets due to domestic unrest could weaken the IDR.