- Returning optimism in the US financial market provided the landscape that allowed the Rupiah to significantly appreciate. However, the uncertain market expectation means that volatility is still lurking around.
- The time is nigh for the Fed to cut its policy rate, but more aggressive FFR cuts may do more harm to the market as the strengthening effect on the JPY and other currencies may exacerbate the sell-off due to the unwinding carry trade.
- The Rupiah is in a better position at the moment, but BI may still need to read the Fed’s signal to chart its way to a rate cut.
