- The demand for FX loans has been increasing since Q3 2023, a trend that seems to be encouraged by the widening rate differentials and the low USDIDR hedging cost during the period.
- However, further increases in FX loans may be driven more by the decreasing FX liquidity condition in the domestic market, as diminishing trade and other FX revenue could compel businesses to seek FX financing.
- The accelerating demand for FX loans presents another challenge for the Rupiah, but the still-ample FX reserves and healthy FX LDR condition may soften the blow on the Rupiah.
