Bank of Korea inaction, rupiah under pressure

There has been some better news from Korea over the last few days, with the country reporting a drop in the number of new infections. However, with people avoiding public spaces such as shops and restaurants, and external headwinds mounting too, we think growth will slow sharply this year. Although the Bank of Korea has sat on its hands so far, we think the central bank will be forced to cut interest rates soon. In contrast, despite the worsening economic outlook in Indonesia, the sharp drop in the rupiah means Bank Indonesia is unlikely to cut interest rates again at its scheduled meeting later this month.