- Apart from an unfavourable global backdrop, balance of payments deficits driven by weaker exports and higher fuel imports help explain the Rupiah’s weakness.
- Widespread concerns over BI’s commitment to its stability mandate, alongside widening fiscal deficits, are adding further pressure on the Rupiah.
- Higher SBN yields resulting from lower demand from public institutions should be viewed positively, as they signal improving price discovery while strengthening the market’s role as a feedback mechanism for the government’s fiscal agenda.
