USD/IDR analysis ahead of the Indonesia central bank decision

The USD/IDR exchange rate drifted upwards on Monday as investors waited for the upcoming interest rate decision by the Bank of Indonesia. The pair retested the important resistance level at 15,000, the highest level since June 5th of this year.

Bank of Indonesia rate decision

The USD to Indonesian rupiah exchange rate has been in a strong upward trend in the past few days after the latest interest rate decision by the Fed. In a statement, the Fed decided to leave interest rates unchanged between 5% and 5.25%.

Focus now shifts to the upcoming interest rate decision by the Bank of Indonesia, which is scheduled for Thursday this week. Economists believe that the central bank will decide to leave interest rates unchanged at 5.75%. 

The Bank of Indonesia, like other central banks, has been hiking interest rates since August last year. Since then, it has hiked rates from 3.75% to 5.75% in its bid to fight inflation. They see the deposit facility rate remaining at 5.0% and the lending facility rate at 6.50%.

Analysts believe that the central bank will leave interest rates unchanged since Indonesia’s inflation has moved to its target. The most recent data showed that the country’s consumer price index (CPI) rose by 4% in May.

Economists at the Bank of Indonesia were expecting that inflation will move to its target in the third quarter of this year. 

Indonesia’s economy is doing relatively well. Like India, the country is seeing inflows in foreign direct investments (FDI) as companies move from China. It is also benefiting from the rising demand for commodities like steel, palm oil, coal, and nickel among others. 

USD/IDR exchange rate forecast

USD/IDR chart by TradingView

The USD to IDR exchange rate has drifted upwards in the past few days. It has risen from a low of 14,615 on May 5th to a high of 15,000. The pair has managed to cross the important resistance point at 14,838, the lowest point on February 3rd.

It has even crossed the important 25-day and 50-day exponential moving averages (EMA). Further, the MACD has moved slightly above the neutral point while the Relative Strength Index (RSI) has drifted upwards.

Therefore, the USD/IDR will likely continue rising as buyers target the next key resistance level at 15,100. This view will be confirmed if the price moves above the important resistance point at 15,012, the highest point on May 31st.