Rupiah Holds Gains as Tariff Uncertainty Caps Dollar

The Indonesian rupiah hovered around IDR 16,830 per dollar on Tuesday, little changed from the previous session, as traders weighed domestic and global developments. President Prabowo Subianto instructed officials to assess the implications of the U.S. Supreme Court’s tariff ruling, aiming to anticipate potential trade and market spillovers. Meanwhile, Bank Indonesia reaffirmed its commitment to keeping inflation within the 1-1/2%–3-1/2% target range this year while prioritizing rupiah stability through pro-market liquidity measures. Policymakers said the currency remains undervalued and pledged to step in if needed, backed by ample foreign reserves. Still, they signaled room for further easing to support growth after delivering 150 basis points of rate cuts since September 2024. Market participants await key domestic data, due next week, including February inflation and January trade figures. Globally, the dollar index firmed ahead of U.S. President Trump’s State of the Union address.

The Indonesian rupiah strengthened for a third consecutive session on Monday, trading below 16,800 per dollar as the dollar index eased following the U.S. Supreme Court’s decision to strike down President Trump’s global tariffs. Although Trump quickly imposed a new 10% tariff, later raising it to 15%, trade policy uncertainty has done little to support the dollar. Domestically, Bank Indonesia left its policy rate unchanged last week for a fifth straight meeting at 4.75%, in line with forecasts, after cutting a total of 150bps since September 2024 amid mild inflation. Policymakers viewed the rupiah as undervalued, reaffirming their commitment to intervene, backed by ample foreign reserves. However, gains were capped by the prospects of further rate cuts this year to support growth. The economy expanded 5.11% in 2025, slightly below the 5.2% target, while Jakarta aims for 5.4% in 2026. Meantime, Indonesia’s current account swung back into deficit in Q4 2025, adding external pressure.

The Indonesian rupiah hovered around IDR 16,880 per dollar on Friday, up for a second session after Bank Indonesia held its key rate for a fifth meeting, in line with consensus. Governor Perry Warjiyo said the move aims to stabilize the currency and support growth following a total 150bp rate reduction since September 2024. The board noted the rupiah remains undervalued and pledged continued intervention, helped by solid forex reserves. It expects the currency to stabilize and gradually rise on the back of those measures and stable fundamentals. Bank Indonesia projects growth to pick up in Q1 2026, driven by stronger household spending and investment. However, the rupiah edged down about 0.2% this week as policymakers signaled they will assess room for further easing. Meanwhile, Indonesia’s current account returned to a deficit in Q4 2025 after a surplus in Q3. Globally, the dollar index hovered near 98, supported by strong US data and hawkish Fed rhetoric, capping the rupiah’s upside.