Johanes
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JLS USDIDR 15250-14200-14000-13250 Allows BI Rate Cut 6% to 5%

FX_IDC:USDIDR   U.S. Dollar / Rupiah
The delaying on interest rate hiking by the Fed to stabilize USD during the US trade negotiation allow the USDIDR target zone to align to downward on the exchange rate target zone 15250-14200-1400 to 15250-14200-14000-13250. The carry trading activity of the carry traders on high interest rate currencies also supportive to strengthen the IDR to USD temporary. The EURIDR also will be pressured to downward to equivalent rate to EURUSD 1.0750 (lower ceiling) and the JPYIDR will still to downward to equivalent rate to USDJPY 114.50-117.50 and the CHFIDR will also to downward to equivalent rate to USDCHF 1.0100-1.0200.

The current aligned USDIDR target zone down to 13250 will maintain the price fluctuation of the price stability 15250-13250 in one year or more. At such period of time, the Bank Indonesia may undertake monetary policy to stimulate the finance and economy by the less and lesser risk of weakening IDR .

At current inflation rate 2.82% and 6 % interest rate, the Bank Indonesia has the room to cut the interest rate gradually from 6% to 5.75 %, 5.50 %, 5.25% and down to 5.00 as well as possibly down to 4.50 % to stimulate the continuing under pressure economy. The gradual rate cutting is also permitted by the current short, medium and long term inflation risk to downward.

Rate increase may be repeated if and when the USDIDR has reached 15250 to maintain the USDIDR price stability 15250-13250 in compliance to monetarists' consensus.
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