- The Rupiah has weakened rapidly over the past week, erasing all of its year-to-date gains as it edges closer to its fundamental value.
- The recent drop in the Rupiah’s value may not drastically alter BI’s rate cut outlook, though the central bank may need to adopt a more pragmatic approach in implementing further cuts.
- The still-ample FX reserves position suggests that BI can continue to rely on money market interventions to manage the Rupiah’s decline while awaiting further FFR cuts from the Fed.
