Given Indonesia’s huge concentration of foreign ownership in local currency government debt and current account deficit, the IDR is expected to continue being vulnerable to changes in global investors’ risk aversion and shifting anticipations about US Fed’s policy actions, according to Scotiabank. The risk appetite has recovered recently with the help of increased sentiment regarding Chinese yuan’s stability and very low interest rates in advanced countries.
“Regardless, we expect the IDR’s depreciating trend to resume later this year with the IDR likely to close 2016 at 14,600 per US dollar”, noted Scotiabank.
