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Rupiah outlook anchored by 2027 budget assumptions, UOB says

UOB’s base case for Indonesia’s 2027 plan assumes a Rp17,500 per US$ exchange rate, alongside a 2.4% of GDP deficit and a 6.0% growth target.

Reported · Written up by our desk · EM Currencies

UOB economist Enrico Tanuwidjaja says Indonesia’s 2027 State Budget provides a calibrated mix of growth and fiscal discipline that is important for the rupiah and local bond markets.

In UOB’s review, the budget framework assumes the rupiah will trade at Rp17,500 per US$, targets 6.0% GDP growth, and keeps the deficit at 2.40% of GDP, with funding tied to disciplined sovereign bond issuance.

UOB also flags that a 10-year government bond yield at 6.90% is part of the scenario, reflecting expectations of stable domestic liquidity conditions and manageable sovereign risk premiums.

The outlook notes risks from prolonged high interest rates in advanced economies or sustained US dollar strength, which could pressure the rupiah and raise government borrowing costs, requiring coordination between Indonesia’s fiscal authorities and Bank Indonesia.

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