USD/IDR: Rupiah holds near weekly lows on Bank Indonesia’s expected rate cut
At its September monetary policy meeting on Thursday, Indonesia’s central bank, Bank Indonesia (BI), cut its 7-day reverse repo rate by 25bps to 5.25%, as widely expected.
The latest Reuters poll showed that 13 of 21 economists said they expect Bank Indonesia (BI) to trim its 7-day reverse repurchase rate by 25 bps to 5.25% this week, bringing this year’s total easing to 75 bps.
The central bank Governor noted that the domestic economy is affected by the global slowdown.
Additional Comments:
Many countries have responded to global slowdown with fiscal and monetary policies.
Continues to monitor and anticipate risks from global economic dynamics.
Policy mix by central bank and govt to keep growth momentum.
2019 economic growth seen below midpoint of 5.0-5.4%, 2020 growth at midpoint of 5.1%-5.5%.
Balance of payments outlook remain good.
Current account deficit manageable due to declining demand for imports.
2019 and 2020 current account deficit seen at 2.5%-3% of GDP.
Rupiah seen remaining stable due to prospect of capital inflows.
Reiterates y/y inflation at end-2019 seen below midpoint of 2.5-4.5% target range.
2020 inflation seen within 2%-4% target range.
Accommodative policy mix can support loan growth without disrupting stability.
Interest rate decision consistent with low inflation outlook.
Rate decision also pre-emptive move to support domestic economy amid slowdown.
On the rate cut by the Indonesian central bank, the Indonesian Rupiah (IDR) remains weaker against its American counterpart, keeping the USD/IDR near weekly tops of 14,110 levels. At the press time, the spot trades +0.30% at 14,093.
USD/IDR Technical Levels
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
