Expectations that the US will soon start to cut interest rates have provided a boost to Asian currencies in recent weeks. But if we are right that slowing growth in the US and the escalating trade war will cause investors to become more risk averse, Asian currencies are likely to come under renewed downward pressure. The prospect of further falls in the rupiah is the key reason why we don’t think Bank Indonesia will follow other central banks in the region in cutting interest rates this year.
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