USD/IDR Outlook: The outlook is likely to increase as the USD is currently trading above its recent average and near recent highs, supported by ongoing tariff concerns.
Key drivers:
- Rate gap: The Federal Reserve's anticipated rate cuts could weaken the USD while Bank Indonesia's recent rate cut aims to stimulate economic growth, keeping the IDR under pressure.
- Risk/commodities: Oil prices have stabilized recently, which may minimize foreign exchange volatility and support the USD due to its status as a safe haven.
- One macro factor: Indonesia's trade surplus and resilient manufacturing activity offer some stability for the IDR but may be overshadowed by geopolitical risks involving the U.S.
Range: The USD/IDR is likely to test recent highs and move within its stable range.
What could change it:
- Upside risk: A significant rise in U.S. economic data could strengthen the USD further.
- Downside risk: Renewed political tensions or major protests in Indonesia might negatively impact the IDR.
