- Indonesia's FX reserves declined to USD 145.3 Bn in July-26, even with USD 1 Bn issuance of panda bonds in late July.
- BI has scaled back SRBI net issuance in July, opting instead to increase discounts on FX hedge instruments to attract foreign inflow.
- Hawkish Fed outlook, uncertainty over MSCI decision, ongoing trade deficit due to elevated energy price, and SAL injection into SOE banks may pressure the Rupiah.
- Given these challenges, BI is likely to adopts a hawkish approach for the time being, with 1-2 hikes for this year.
