Rupiah Extends Losses for 3rd Day

The Indonesian rupiah weakened past IDR 16,850 per dollar on Tuesday, down for a third straight session as the U.S. dollar firmed amid fears of escalation in the U.S.–Israel conflict with Iran. Locally, Bank Indonesia signaled it remains open to further easing to support President Prabowo’s pro-growth agenda, following 150bps of rate cuts since September 2024. Meanwhile, January’s trade surplus undershot forecasts as imports surged ahead of Ramadan and Eid al-Fitr. Still, losses were tempered after the central bank pledged to curb volatility through forward operations and spot intervention. Meanwhile, annual inflation hit a 35-month high of 4.76% in February, above the 1-1/2%–3-1/2% target range, largely due to base effects from last year’s electricity tariff discounts, but is expected to ease in the coming months. Governor Perry Warjiyo remains confident inflation will stay mild in 2026–2027. Markets now await February foreign reserve data after January’s drop from a nine-month high.

The Indonesian rupiah slipped to around IDR 16,850 per dollar on Monday, down for the second session as the dollar index climbed on safe-haven demand amid mounting tensions in the Middle East. Bank Indonesia said the U.S. attack on Iran has intensified global risk-off sentiment and pledged to stay active in the forex market to stabilise the currency. On fresh data, annual inflation hit a 35-month top of 4.76% in February, above the central bank’s 1-1/2%–3-1/2% target range, largely due to base effects from electricity tariff discounts last year. Core inflation edged up to 2.63%, the strongest since May 2023. Meantime, January’s trade surplus missed forecasts as imports jumped ahead of Ramadan and Eid al-Fitr. Governor Perry Warjiyo has signaled further policy easing, citing a mild inflation outlook for 2026–2027 and support for President Prabowo Subianto’s pro-growth agenda. The board last month held rates at 4.75% for a fifth straight meeting after cutting 150bps since September 2024.

The Indonesian rupiah was little changed on Friday, hovering near IDR 16,760 per dollar after recent gains, as investors awaited February inflation and January trade data for fresh direction. January headline inflation accelerated to a near three-year high of 3.55% yoy, while core inflation rose to a nine-month peak of 2.45%, though both remained within Bank Indonesia’s target range. The contained price pressures reinforced expectations that policy can stay supportive. December’s trade surplus also beat forecasts, with exports outpacing imports, adding to external stability. In mid-February, Bank Indonesia kept its key rate at 4.75% for a fifth straight meeting after delivering 150bp of cuts since September 2024, but signaled scope for further easing in line with President Prabowo Subianto’s pro-growth agenda. The rupiah is set to rise about 0.7% this week and 0.2% this month, supported by solid reserves and firmer fiscal conditions, while a steady dollar index limited sharper gains.