Rupiah Maintains Uptrend

The Indonesian rupiah firmed to around IDR 16,750 per dollar on Thursday, extending gains from the prior session as the dollar index slipped further amid lingering uncertainty over U.S. tariffs. Domestically, Bank Indonesia kept its benchmark rate unchanged at 4.75% earlier this month for a fifth straight meeting, after delivering 150bps cuts since September 2024. The central bank noted the move aimed to support the rupiah and enhance monetary policy transmission. It added that ample foreign reserves in January would bolster efforts to stabilize the currency, with markets awaiting February inflation and January trade data due next week. So far this week, the rupiah has gained about 0.8%, aided by improved fiscal space after tax revenue surged 30.7% yoy by end-January, reflecting lower tax refunds and better compliance. However, bets of further monetary easing limited upside amid a pro-growth stance under President Prabowo, after 2025 GDP growth fell short of the 5.2% official target.

The Indonesian rupiah strengthened to below IDR 16,800 per dollar on Wednesday, following a muted prior session as the dollar index slipped after U.S. President Trump offered no shift in tariff policy during his State of the Union address. Locally, Bank Indonesia reaffirmed its commitment to currency stability, pledging liquidity support and intervention backed by ample reserves. The central bank has held its policy rate at 4.75% for a fifth straight meeting earlier this month, following 150bps of cuts since September 2024 amid subdued inflation. However, the rupiah has been pinned near record lows since President Prabowo appointed his nephew as deputy governor in early February, stoking governance concerns. Expectations of further easing, weak demand at a recent government bond auction, and skepticism over the USD 20 billion free-meals program have added to fiscal worries. Traders also remain cautious ahead of key data next week, including February inflation and January trade figures.

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.