USD/IDR Price News: Rupiah hits daily highs near 14,490 as Bank Indonesia holds rates


Indonesia’s central bank, Bank Indonesia (BI), is likely to hold fire in July, by keeping the benchmark 7-day reverse repo unchanged at 3.50% at its monetary policy meeting on Thursday.

The central bank governor Perry Warijyo said that “Q3 GDP growth is expected to slow due to mobility curbs.”

Additional comments

Global economy is seen growing faster than previously expected.

ASEAN economies seen growing slower due to covid restrictions.

Global financial market uncertainty has risen.

This has driven capital outflows to quality assets.

EM currencies have been under pressure.

Domestic economic activity seen weaker due to rising COVID-19 cases.

Weaker GDP growth especially due to weaker household consumption.

Q4 GDP growth is expected to rise driven by improving mobility and rising vaccination.

2021 GDP outlook at +3.5-4.3%.

2021 current account deficit estimate at 0.6% to 1.4% of GDP.

Stabilization measures have kept rupiah movement under control.

Interest rate decision consistent need to maintain stability in currency, markets, amid uncertainty.

Decision also in line with low inflation, need to support economy.

FX implications

The Indonesian Rupiah (IDR) remains on the bids following the in-line with expectations BI no-rate change decision.

At the time of writing, USD/IDR trades at 14,494, down 0.32% on a daily basis. The spot is on a corrective pullback from three-week highs of 14,560 reached on Wednesday.

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