USD/IDR: Rupiah to come under some pressure as BI opts not to join the rate hike camp – ING
|Bank Indonesia (BI) kept policy rates unchanged at 3.5%, matching the market consensus, as BI appears confident that fiscal measures can contain price pressures. In the view of economists at ING, the Indonesian rupiah is set to suffer some pressure as BI holds out on rate hikes for now.
BI enacts dovish pause
“We had expected BI to keep policy rates unchanged at today’s meeting, however, we believed that Governor Warjiyo would at least set the table for a June rate hike. Warjiyo did the exact opposite by pledging sustained support for the economic recovery and citing IDR stability.”
“It appears the central bank remains confident that inflation can be contained by subsidies rolled out by fiscal authorities and that IDR would remain supported by a healthy trade surplus in the near term. As such, it appears BI is in no hurry to hike policy rates in the near term unless we see a substantial pickup in core inflation in the coming months and or heightened weakness from IDR.”
“With BI enacting a dovish pause, expect IDR to come under some pressure as BI opts not to join the rate hike camp for now.”
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.