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MNI Bank Indonesia Preview - April 2024: Decision Focus On FX Stability

We believe that BI will use its other tools to combat rupiah weakness and hold rates at 6%, but with the currency so soft its prolonged hold is also likely to be extended.

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EXECUTIVE SUMMARY:

  • Bank Indonesia’s (BI) April 24 meeting is going to be all about FX stability and how they address that remains a significant unknown. 11 of the 39 analysts on Bloomberg are forecasting a 25bp rate hike, which BI did in October to support the rupiah.
  • We expect it to be on hold in April as unlike October the next Fed move is expected to be a cut, the rupiah has weakened this year despite October's hike and BI has stated it sees an opportunity to ease in H2 this year. While we don't expect material changes to most of the statement, BI is likely to voice its concern regarding recent IDR weakness and reiterate that it will use its other tools to stabilise the currency.
  • USDIDR has weakened 3.6% since the 20 March BI meeting and reached its highest level this week in around 4 years, the height of pandemic uncertainty. In addition, it has lost value versus its main trading partners with the JP Morgan NEER falling 1.8%.

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BI Preview - April 2024.pdf


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EXECUTIVE SUMMARY:

  • Bank Indonesia’s (BI) April 24 meeting is going to be all about FX stability and how they address that remains a significant unknown. 11 of the 39 analysts on Bloomberg are forecasting a 25bp rate hike, which BI did in October to support the rupiah.
  • We expect it to be on hold in April as unlike October the next Fed move is expected to be a cut, the rupiah has weakened this year despite October's hike and BI has stated it sees an opportunity to ease in H2 this year. While we don't expect material changes to most of the statement, BI is likely to voice its concern regarding recent IDR weakness and reiterate that it will use its other tools to stabilise the currency.
  • USDIDR has weakened 3.6% since the 20 March BI meeting and reached its highest level this week in around 4 years, the height of pandemic uncertainty. In addition, it has lost value versus its main trading partners with the JP Morgan NEER falling 1.8%.

Click to view full preview:

BI Preview - April 2024.pdf