USD/IDR Outlook:
Slightly positive, but likely to move sideways as the rate is just above its recent average without a strong current driver.
Key drivers:
• Rate gap: The US Federal Reserve has held interest rates steady while Bank Indonesia's recent rate cuts prioritize growth over currency stability.
• Risk/commodities: Rising oil prices may support the USD, but overall demand for the IDR remains weak due to high global interest rates attracting investors to the USD.
• One macro factor: Political uncertainty surrounding Bank Indonesia's leadership has raised concerns among investors, impacting confidence in the rupiah.
Range:
Expect the USD/IDR pair to hold within its recent tight range.
What could change it:
• Upside risk: Positive US retail sales data could strengthen demand for the USD.
• Downside risk: Continued capital outflows from Indonesia could further weaken the rupiah.
