Rupiah Slips Further

The Indonesian rupiah hovered around IDR 17,360 per dollar on Thursday after briefly touching 17,425 in the previous session. The local currency found some support as the U.S. dollar slipped further on reports that Washington and Tehran are drafting a new proposal to end the Middle East conflict, easing haven demand. Locally, President Prabowo approved seven new Bank Indonesia measures to bolster the currency, including halving the cap on undocumented dollar cash buying to USD 25,000 and requiring resource exporters to place 50% of forex earnings in domestic banks from June 1. However, the rupiah has fallen almost 4% this year, with skepticism over policy effectiveness persisting even as the central bank has held rates steady since October. On the trade front, March’s surplus was not supported by export growth, but driven by falling imports. Shrinking forex reserves also weighed on sentiment, despite Governor Perry Warjiyo saying they remain sufficient to support stabilisation efforts.

The Indonesian rupiah hovered near IDR 17,400 per dollar on Wednesday, close to record lows as concerns over external buffers deepened. Declining foreign reserves have raised doubts about the central bank’s ability to support the currency, with markets awaiting April data due Friday after March figures fell to a near two-year low. Exports also shrank in March, the first time since December, adding pressure to the external balance. Authorities have moved to respond: the chief economic minister said the government is working with Bank Indonesia to expand swap lines with China, Japan, and South Korea, while the central bank cut the cap on undocumented U.S. dollar cash purchases to USD 25,000 from USD 50,000 to curb speculation. April Inflation stayed contained at 2.42%, within the central bank’s limit, though risks persist from rising energy costs and supply disruptions linked to Middle East tensions. Meantime, the U.S. dollar index eased on hopes of a potential Washington–Tehran deal.

The rupiah slipped past IDR 17,400 per dollar on Tuesday, extending losses for a third session to a new record low. Sentiment was pressured by a firmer U.S. dollar index, as renewed hostilities in the Middle East boosted safe-haven demand. Meanwhile, concerns over Indonesia’s external buffer reemerged ahead of April’s foreign reserves data, after March figures fell to a near two-year low. External pressures intensified as exports shrank in March, the first in four months. Still, support came from the central bank's reassurances, pledging consistent and measured steps to stabilise the rupiah. It added that the currency weakness was broadly in line with regional peers, stressing that authorities will optimise interventions through offshore and domestic NDFs, spot operations, and bond buying. Meanwhile, the economy grew 5.61% yoy in Q1 2026, the fastest pace since mid-2022, supported by lower borrowing costs and government stimulus, offering some support to the rupiah.