Research

Is Another FX Crisis Brewing For Rupiah?

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Algo Research Team

Economics | Apr 21, 2024 | Views: 1328

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Key Summary:

  • Historical lessons from previous crises
  • Yen could spark another FX crisis
  • Higher US rate creates liquidity shortage

At the beginning of March, we discussed our views on Rupiah (read here: IHSG - Mind The Gap At 6,900 & Rupiah To Break Above 16,000) with a target of 16,200 which is now achieved. Our main reasons are US interest rate to remain "higher-for-longer" from reflation & limited domestic catalysts, leading to foreign outflows in 2Q24.


Thus far, it has played out well especially with rising geopolitical risks, US government deficit and China economic improvement that are pushing secondary global inflation & more hawkish monetary outlook (market 2024 interest rate cuts expectations down from 7x in January to 2x in April).

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