USD/IDR: Indonesia rupiah forecast ahead of the rate decision

August 23, 2023 07:00 PM PDT | By Invezz

USD/IDR: Indonesia rupiah forecast ahead of the rate decision — Image source: Invezz

Bank of Indonesia decision ahead

The Bank of Indonesia will conclude its two-day meeting on Thursday and deliver the closely-watched decision. All economists polled by Bloomberg and Reuters believe that the bank will leave interest rates unchanged at 5.75%.

It has previously left them intact in the past few meetings. The BoI is not under pressure to hike rates since Indonesia’s inflation has moved back to target in the past few months. Inflation slowed to 3.08% YoY in July, as I wrote here.

Therefore, analysts believe that the bank will hold rates steady throughout the year. Some analysts see it slashing interest rates either in the fourth quarter or in Q1 of next year.

The most recent data showed that Indonesia’s economy expanded by 5.2% in Q2, helped by the growing consumer and government spending. Household spending was supported by moderating inflation.

However, there are signs that the economy is slowing. Exports have struggled recently as key markets like China and India. As I wrote earlier this week, there are signs that the Chinese economy is slowing at a faster pace than expected.

The USD to IDR exchange rate will also react moderately to the upcoming Jackson Hole summit in the United States. This is an important meeting that brings together key central bank officials. Jerome Powell, the head of the Federal Reserve will provide hints about what to expect in September.

USD/IDR forecast

USDIDR chart by TradingView

The daily chart shows that the USD to rupiah exchange rate has pulled back in the past few days. This decline happened as bears attempted to retest the important support level at 15,213, the highest point on July 10th.

The pair has remained above the 50-day moving average, signaling that buyers are in control. Therefore, the outlook for the pair is bullish, with the next level to watch being this week’s high of 15,354. A drop below the support at 15,200 will be bearish for the pair.

The post USD/IDR: Indonesia rupiah forecast ahead of the rate decision appeared first on Invezz.

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