USD/IDR: Sustained Rupee Strength Likely Will Have to Wait Until External Pressures Ease – MUFG

In Indonesia, quick vote poll results show that the current Defense Minister, Prabowo Subianto, has won the 2024 presidential election, avoiding the uncertainty of the second round of elections. MUFG Bank economists analyze the outlook for the Rupee (IDR) following the election result.

Caution on USD/IDR

We remain cautious on the USD/IDR, maintaining our forecast at 15,800 in the first quarter of 2024 and 15,850 in the second quarter of 2024.

With Prabowo's victory in the first round of the presidential election, uncertainty has diminished to some extent. Even so, we remain attentive to the possible risks of political transition derived from the formation of a government coalition between the different political parties and the appointment of the main members of the cabinet.

Elsewhere, markets have further reduced expectations for US rate cuts this year following stronger-than-expected US CPI data for January. Interest rate reductions by Bank Indonesia and the strength of the Rupiah against the Dollar will likely have to wait until external pressures subside.

Source: Fx Street

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