Indonesian Rupiah: Sentiment gains no support from stronger growth – MUFG

Indonesia’s Q3 GDP grew 5.47% year-on-year, according to MUFG. Growth exceeded expectations as stronger exports and resilient domestic demand provided support. With private consumption and investment holding firm, Bank Indonesia faces less urgency to bolster activity. Nevertheless, persistent concerns over investor confidence and weak portfolio flows are still expected to hamper a sustained recovery in the Indonesian Rupiah.

5.47% GDP growth beats expectations; FX caution persists

"Indonesia’s Q3 GDP growth surprised to the upside, accelerating to 5.47%yoy from 5.29% in Q2, beating the 5.2% consensus."

"Domestic demand is holding up better than expected, with private consumption largely the same at 5.04%yoy and investment expanded 6.06%yoy."

"While stronger growth reduces the urgency for BI to support economic activity, it does little to address lingering investor confidence concerns."

"We remain cautious on IDR, with domestic risks and weak portfolio flows likely to constrain any sustained recovery."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)