UOB’s Global Economics & Markets Research, led by Enrico Tanuwidjaja and Vincentius Ming Shen, highlights that Indonesia’s wider current and financial account deficits increase downside risks for the Rupiah. Bank Indonesia expects a manageable current account deficit, but higher global yields, the Federal Reserve’s stance, and geopolitical tensions are seen sustaining depreciation pressure on the currency over coming quarters.

Rupiah seen under sustained depreciation risk

"However, persistent external headwinds—particularly the Federal Reserve’s “higher-for-longer” stance—are expected to sustain depreciation pressure on the rupiah."

"The rupiah faces continued depreciation risks amid higher global yields and persistent uncertainty, while export performance is likely to remain constrained by soft global demand and commodity price volatility."

"Against this backdrop, Indonesia’s external position is expected to remain under pressure."

"Policy coordination between the government and private sector will be critical in navigating these challenges."

"In particular, initiatives led by Danantara—including its role as a capital mobilization platform and as an export conduit via Danantara Sumberdaya Indonesia (DSI)—could provide structural support to external balances."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)