Rally in IDR, further declines in inflation, to fuel a further decline in the Bank of Indonesia (BI). USD / IDR is trading at 14,885.
“After surprisingly keeping the policy on hold in April, we expect the Bank of Indonesia to reduce its 7-day reverse repo rate by 25bp to a maximum of 4.25% at its meeting on Tuesday, May 19. . ”
“The consensus is mixed, half of the analysts interviewed (Bloomberg) not seeking any change, which implies that it is a close call. We see little reason for BI not to calm down. “
“We see a limited increase in IDR from current levels, with risks of renewed weakness amid increased risk aversion. A likely 25 bp drop during this meeting will have a limited impact on IDR. “