USD/IDR: Rupiah set to prove resilient against the greenback – Mizuho


In April, the USD/IDR pair continued fluctuating without moving in any direction. According to economists at Mizuho Bank, the Indonesian rupiah is forecast to remain strong against the US dollar in May.

There are some sources of concerns though 

“Given the current situation with US interest rates, security investment in Indonesia is likely to return. It can therefore be said that the Indonesian rupiah is not likely to depreciate further for a while.”

“The situation in Indonesia with the COVID-19 pandemic and covid vaccinations has not been seen as optimistic from a global perspective. The Indonesian rupiah is thus expected to continue strengthening based on the trade surplus with increasing exports resulting from the economic recovery of trade partners.”

“The current situation in India has been extremely severe, as has been reported in the media. Indonesia could fall into the same situation in the times ahead, and such risks are relatively high. Market participants should thus continue carefully observing the headlines on the domestic situation as related to the COVID-19 pandemic. On the other hand, if the covid situation does not deteriorate any further, the trade surplus could be gradually reduced. It should be reminded that this means that a supporting factor for the Indonesian rupiah could start to weaken in the long run.”

 

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