In January, the Indonesian rupiah weakened against the US dollar from 14,257 to 14,366. Economists at MUFG Bank forecast the USD/IDR pair at 14,400 by end-March and at 14,600 by year-end. 

Bank Indonesia (BI) to hike policy rates after inflation heads higher in 2022

“Inflation is also set to rise higher, to 2.6% in 2022 after 1.6% in 2021. This will bring inflation to within the BI inflation target range of 2-4% and allow the BI to shift attention from growth/inflation towards maintaining financial stability.” 

“We believe that BI will hike its policy rates twice in H2-2022, bringing the 7D RR to 4.00% by the end of the year.”

“We forecast USD/IDR at 14,400 at end-March, and heading higher to 14,600 by the end of the year.”