USD/IDR Outlook:
The USD/IDR is slightly positive, trading just above its 90-day average and within a stable range. Current geopolitical tensions have reinforced demand for the safe-haven US dollar.
Key drivers:
• Rate gap: The US Federal Reserve's recent rate hikes have strengthened the USD compared to the Bank Indonesia's unchanged rate, maintaining pressure on the IDR.
• Risk/commodities: Ongoing geopolitical risks keep the USD strong, impacting the IDR negatively as investors seek safer assets.
• Macro factor: The Indonesian government’s new policy requiring export earnings to stay within the domestic system aims to stabilize the rupiah amidst ongoing vulnerabilities.
Range:
Expect USD/IDR to hold in a tight range, trading between 16601 and 16970.
What could change it:
• Upside risk: A stronger-than-expected US producer price index could further boost the USD.
• Downside risk: A significant improvement in Indonesia's economic outlook or further interventions by Bank Indonesia could support the IDR.
