Global monetary policy remains the dominant driver of curren...

Global monetary policy remains the dominant driver of currency markets. The US Federal Reserve's hawkish stance, now under the new leadership of Governor Warsh, continues to fuel US Dollar strength. This has created significant headwinds for emerging market currencies, including the Indonesian Rupiah. While recent easing of geopolitical tensions in the Middle East has provided some temporary relief for risk assets, the underlying pressure from high US interest rates persists, making the dollar the preferred safe haven on a global scale and putting sustained downward pressure on the IDR. Domestically, the situation is precarious. Bank Indonesia (BI) is engaged in an aggressive but thus far ineffective battle to defend the Rupiah, with multiple rate hikes lifting the benchmark rate to 5.75%. Despite these efforts, the currency has breached Rp 17,800 against the US Dollar, sparking public concern about a potential slide to Rp 20,000. This extreme currency depreciation is a powerful catalyst for local gold demand, as Indonesians seek to preserve their wealth. BI's move to lower the foreign currency purchase threshold is a soft capital control measure, which further enhances the appeal of physical gold as an accessible and reliable store of value outside the formal banking system. Our outlook for gold priced in Rupiah is exceptionally bullish. The combination of a strong US Dollar globally and a rapidly depreciating Rupiah domestically creates a perfect storm for local gold prices. We anticipate demand for physical bullion to accelerate as confidence in the Rupiah erodes. Supply-side constraints, indicated by Antam's dwindling reserves and rush for new mines, will likely exacerbate this trend. We advise clients to continue accumulating physical gold as a crucial hedge against further currency devaluation and domestic economic instability.