Rupiah Slips Ahead of February Forex Reserve Data

The Indonesian rupiah weakened to around IDR 16,900 per dollar on Thursday as the U.S. dollar firmed on upbeat economic data, while tensions in the Middle East entered a sixth day, supporting safe-haven demand. As a net oil and gas importer, Indonesia remains exposed to rising energy costs, with authorities reportedly weighing possible domestic fuel price adjustments after the closure of the Strait of Hormuz, a key global oil shipping route. Inflation hit a near three-year high of 4.76% in February, beyond Bank Indonesia’s 1-1/2%–3-1/2% target range, due to base effects from last year’s electricity tariff discounts. Governor Perry Warjiyo said inflation should remain manageable in 2026–2027, leaving room for further policy easing after 150bps of rate cuts since September 2024. To support the rupiah, the central bank has stepped up intervention in both spot and forward markets. Investors now await February foreign reserve data due Friday after January’s decline from a nine-month high.

The Indonesian rupiah slid past IDR 16,900 per dollar on Wednesday, marking a fourth straight session of losses as a firmer U.S. dollar index drew support from safe-haven demand amid an escalation of the conflict in the Middle East, now in its fifth day. As a net oil and gas importer, Indonesia is vulnerable to rising energy prices, with heightened geopolitical risks potentially pressuring the rupiah and adding upside risks to inflation. The annual inflation accelerated to a 35-month high of 4.76% in February, exceeding the 1-1/1%–3-1/2% target range, mainly due to base effects from last year’s electricity tariff discounts. Meanwhile, Bank Indonesia Governor Perry Warjiyo expressed confidence that inflation will stay mild in 2026–2027, leaving room for further policy easing after 150bps of rate cuts since September 2024. Still, losses were capped by the central bank’s renewed pledge to continue bold and consistent intervention in forward and spot markets to safeguard rupiah stability.

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.