Economists at ANZ Bank have been constructive on the Indonesian rupiah as strong trade surplus support IDR. They forecast USD/IDR at 14,000 by end-2022.

The outlook for IDR will hinge on the new Omicron variant

“Looking into 2022, commodity prices will likely remain strong, underpinning the export driver. However, with the reopening of Indonesia’s economy, import growth may rebound, leading to an easing in the trade surplus.” 

“If Omicron turns out to be a deadly strain, it will hurt risk sentiment and bond flows into Indonesia, at a time when the US Fed is unwinding accommodation. Hence, it will be less supportive to risk taking. However, if Omicron turns out to be mild and assuming an orderly withdrawal of monetary accommodation in the US, IDR will likely weather the Fed’s policy normalisation.” 

“We forecast IDR to appreciate towards 14,000 by end-2022.”