Rupiah Extends Losses After Rate-Cut Signals, Key Data

The Indonesian rupiah slipped past IDR 17,380 per dollar on Thursday, down for three consecutive sessions to hover near a record low. Broad strength in the U.S. dollar weighed on sentiment, after the Fed held rates steady but offered a more hawkish stance amid persistent cost pressures. At the same time, higher oil prices added to inflation concerns as tensions in the Middle East remained unresolved. Locally, April CPI data will be due next week, with a focus on the impact of higher non-subsidized fuel prices. March trade figures will also be closely watched after a surge in imports narrowed February's trade surplus, adding to external headwinds. Concerns were further amplified by depleted foreign reserves, even as Bank Indonesia viewed the March level of USD 148 billion remains sufficient to cushion overseas shocks. For the month, the rupiah is set to weaken around 2.2%, a third monthly loss amid mounting fiscal strains, including declining emergency funds and delayed debt repayments.

The Indonesian rupiah weakened past IDR 17,300 per dollar on Wednesday, extending losses for a second session as fiscal concerns deepened. Local media said Jakarta may be facing funding constraints, with emergency reserves rapidly depleted amid rising debt repayments. Caution also built ahead of key domestic data this week, including April CPI and March trade figures. Inflation eased to 3.48% in March, though upside risks emerge from higher global oil prices. February’s trade surplus undershot estimates as imports surged, adding to external pressures. More immediate strain came from falling forex reserves, which fell to a near two-year low in March. Traders also appeared to discount Bank Indonesia’s support signals after it left rates unchanged for a seventh straight meeting, raising questions about policy traction. Globally, the U.S. dollar index held steady ahead of the Fed’s decision later today, expected to be Jerome Powell’s final meeting as chair before his term ends in May.

The Indonesian rupiah inched lower to around IDR 17,250 per dollar on Tuesday, giving back part of its recent two-day strength. The slight decline came even as the U.S. dollar index fell further amid renewed diplomatic efforts to ease U.S.–Iran tensions. Caution also grew ahead of key domestic releases later this week, including April inflation and March trade. March CPI slowed to 3.48%, but upside risks linger from higher global oil prices, while February’s trade surplus was below expectations as imports surged, raising concerns over external balances. At the same time, fiscal worries resurfaced with reports of shrinking government emergency funds and rising debt repayments, fueling fears of financial strains. Still, losses were capped by Bank Indonesia’s firm commitment to support the currency. The central bank last week kept rates steady for a seventh straight meeting, and Governor Warjiyo noted the rupiah remains undervalued relative to fundamentals, signaling scope for recovery.