USD/IDR Outlook: The outlook for USD/IDR is slightly positive, but likely to move sideways, as the rate is just above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The US Federal Reserve is expected to reduce rates further, which typically weakens the USD against the IDR.
• Risk/commodities: Global uncertainties and a weakening oil trend have put pressure on emerging market currencies like the IDR.
• One macro factor: The Indonesian government's plan to enforce stricter currency retention rules may complicate the currency outlook and limit IDR appreciation.
Range: USD/IDR is likely to drift within the recent range, showing some stability as it has fluctuated only slightly over the past few months.
What could change it:
• Upside risk: A significant escalation in US geopolitical tensions could lead to a rapid drop in USD value.
• Downside risk: Further interventions by the Indonesian central bank could stabilize the IDR and enhance its value against the USD.
