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*Interest rates* set by the central banks of both countries (Bank Indonesia and the Bank of England) play a crucial role. Higher interest rates often attract foreign investors looking for better returns on their investments. This increased demand for the currency leads to its appreciation. Central banks also use monetary policy tools, such as quantitative easing or tightening, which can influence exchange rates. For example, if the Bank of England decides to increase interest rates, the GBP might strengthen against the IDR, making it more expensive for Indonesians to buy British pounds.
