The increase in the number of Covid-19 cases is expected to hamper economic recovery. All economic indicators, such as inflation, IKK, PMI, and trade surplus, are starting to show a gloomy outlook. We estimate that these indicators will continue to decline in July, especially after the government decided to implement Emergency PPKM in Java and Bali. In external conditions, the Rupiah tends to move sideways because investors consider the latest developments in the Covid-19 case and the attitude of central banks, especially the Fed. Despite the need to encourage economic growth, there is no room for BI to change its policies because the supply side is still weak. To maintain the exchange rate and financial stability under the uncertainty of the Covid-19 crisis, we see that BI needs to hold back
policy interest rate at 3,50% this month.

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