USD/IDR: Pressure on the Rupiah should only intensify in the short to medium term – SocGen
|The Indonesian Rupiah has already fallen by more than 2.6% against the Dollar so far this quarter on the back of high crude Oil prices and a rising Dollar Index. Economists at Société Générale discuss IDR outlook.
BI awaiting Fed pivot
The IDR is facing depreciation pressure due to rising crude oil prices and a strong dollar. In the event that the Fed hikes rates again (BI expects the Fed to hike in November), further narrowing of the rate differential would put additional pressure on the currency. In addition, a worsening current account balance (CAB) is proving challenging.
Despite well-behaved inflation and growth that’s failing to regain traction, BI is in no position to embark on a policy rate easing cycle. With the Fed clearly indicating higher rates for longer and BI not ruling out an additional hike, the pressure on the currency and bond yields should only intensify in the short to medium term. Hence, we do not foresee a rate cut by BI before 1Q24, with a non-negligible probability of it being shifted further out to 2Q24.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.