The USD/IDR pair saw some dip-buying near the 16,550 level during Wednesday’s Asian session, halting the previous day’s retracement from its highest point since the 1998 Asian financial crisis. Spot prices recovered to the 16,600 level in the final hour of trading, although they remain below the daily swing high.
The Indonesian Rupiah (IDR) found temporary support from Bank Indonesia’s (BI) intervention on Tuesday, where the central bank acted in the foreign exchange, non-deliverable forwards, and bond markets to restore confidence. An official also stated that BI will continue to monitor market conditions and intervene when necessary to stabilize the currency. However, this initial support proved short-lived amid ongoing political uncertainty in Indonesia, particularly concerning President Prabowo Subianto’s policies.
This political instability, along with the uncertainty surrounding US President Donald Trump’s trade tariffs and the resurgence of US Dollar (USD) buying, provided upward pressure on the USD/IDR pair. Trump imposed secondary tariffs on Venezuela, and any country that buys oil or gas from Venezuela will face a 25% tariff on trade with the US. Additionally, Trump is expected to announce retaliatory tariffs, effective April 2, aimed at about 15 major US trading partners.
Meanwhile, the USD regained some positive traction, moving closer to a nearly three-week high achieved on Tuesday. However, the upside appears limited due to growing expectations that the Federal Reserve (Fed) will soon resume its rate-cutting cycle. The Fed has maintained its forecast for two 25-basis-point rate cuts by the end of this year, while revising its growth outlook lower amid mounting concerns over the impact of Trump’s trade policies. This development may cap further USD gains, thereby limiting the upside for the USD/IDR pair.
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