- Bank Indonesia’s FX reserves declined sharply by USD 3.6 Bn to USD 140.4 Bn in March 2024 due to ongoing pressure on the rupiah.
- The depreciation in the rupiah is caused by global factors, mainly the waning expectation of Fed rate cuts and the depreciation in both Yuan and Yen. This results in outflows, especially in the bond market. In addition, the pressure on the rupiah also comes from the increased FX demand from the domestic economy.
- BI is still quite likely to hold the interest rate in April and continue FX interventions, but there might be a rate hike with more KLM incentives at some point in the upcoming months, with the incentives offsetting the hawkish move with pro-growth policy.
