Rupiah Edges Higher, Yet Weekly Decline Persists

The Indonesian rupiah firmed to around IDR 17,290 per dollar on Friday, inching up from a record low near 17,330 in the prior session. However, sentiment remained fragile as broad U.S. dollar strength, fueled by haven demand amid stalled U.S.–Iran peace efforts, continued to pressure emerging market currencies. Earlier this week, Bank Indonesia left interest rates unchanged for a seventh straight meeting, as expected. Governor Perry Warjiyo also pledged to step up onshore and offshore interventions, stressing the rupiah is undervalued relative to fundamentals. He noted foreign reserves of about USD 148 billion in March provided a sufficient buffer against external shocks. Yet the currency has repeatedly hit record lows this month and is on track for a fourth straight weekly fall. Still, modest net capital inflows into government bonds at the start of Q2 offered early signs of stabilization, with investors awaiting Q1 foreign direct investment data due next week for further direction.

The Indonesian rupiah slipped toward a new low of around IDR 17,290 per dollar on Thursday, marking a third session of losses amid a firmer U.S. dollar that drew support from haven demand following stalled U.S.–Iran peace efforts. Wednesday's move by Bank Indonesia to keep interest rates unchanged for a seventh straight meeting offered little support, as the currency repeatedly hit record lows this month. Pressure has been exacerbated by Indonesia’s reliance on imported energy, despite recent hikes in non-subsidized fuel prices. Governor Perry Warjiyo warned higher oil prices could widen the current account deficit to 0.5%–1.3% of GDP, up from an earlier estimate of 0.1%–0.9%. In response, Bank Indonesia has stepped up intervention, pushing forex reserves to a two-year low while lifting bond yields to attract inflows. However, sentiment remains vulnerable, as fiscal concerns surrounding President Prabowo’s key programs add to broader risk-off sentiment tied to the Middle East conflict.

The Indonesian rupiah was little changed, hovering around IDR 17,170 on Wednesday afternoon after the central bank left its benchmark rate at 4.75% for a seventh straight meeting, as expected. Governor Perry Warjiyo said the decision aims to stabilise the currency, stressing readiness to adjust policy and intervene while keeping inflation within target. He noted that forex reserves around USD 148 billion in March remain adequate, with BI prepared to step up intervention in spot and forward markets. Warjiyo noted the rupiah is undervalued relative to fundamentals. The currency has touched record lows several times this month, rattled by Indonesia’s reliance on imported energy despite recent non-subsidized fuel price hikes. Persistent capital outflows also weighed, reflecting fiscal concerns and broader risk-off sentiment tied to the Middle East conflict. Policymakers kept their 2026 growth outlook at 4.9% to 5.7% and expect inflation to stay within the 1-1/2% to 3-1/2% band until 2027.