Rupiah Inches Up But Weekly Slide Persists

The Indonesian rupiah edged higher in thin holiday trade Friday, hovering near 17,300 per dollar after briefly hitting a fresh low of around 17,390 previously. The slight rise tracked a softer U.S. dollar index amid signs of regional forex stabilization. However, sentiment stayed fragile ahead of a slew of key domestic data. April CPI, due Monday, will be watched for signs of pass-through from higher non-subsidized fuel prices, as elevated oil prices amid Middle East tensions stoke inflation risks. March trade will also draw scrutiny after surging imports narrowed February’s surplus, reflecting external strain. Q1 GDP will shed light on the growth path after notching a three-year top in Q4. April reserves will be monitored after March’s near two-year low. For the week, however, rupiah is set for a fifth straight drop, down 0.6% so far, weighed by shrinking government cash buffers. Doubts also lingered over central bank’s policy support, despite rates being held steady since October.

The Indonesian rupiah slipped past IDR 17,380 per dollar on Thursday, down for three consecutive sessions to hover near a record low. Broad strength in the U.S. dollar weighed on sentiment, after the Fed held rates steady but offered a more hawkish stance amid persistent cost pressures. At the same time, higher oil prices added to inflation concerns as tensions in the Middle East remained unresolved. Locally, April CPI data will be due next week, with a focus on the impact of higher non-subsidized fuel prices. March trade figures will also be closely watched after a surge in imports narrowed February's trade surplus, adding to external headwinds. Concerns were further amplified by depleted foreign reserves, even as Bank Indonesia viewed the March level of USD 148 billion remains sufficient to cushion overseas shocks. For the month, the rupiah is set to weaken around 2.2%, a third monthly loss amid mounting fiscal strains, including declining emergency funds and delayed debt repayments.

The Indonesian rupiah weakened past IDR 17,300 per dollar on Wednesday, extending losses for a second session as fiscal concerns deepened. Local media said Jakarta may be facing funding constraints, with emergency reserves rapidly depleted amid rising debt repayments. Caution also built ahead of key domestic data this week, including April CPI and March trade figures. Inflation eased to 3.48% in March, though upside risks emerge from higher global oil prices. February’s trade surplus undershot estimates as imports surged, adding to external pressures. More immediate strain came from falling forex reserves, which fell to a near two-year low in March. Traders also appeared to discount Bank Indonesia’s support signals after it left rates unchanged for a seventh straight meeting, raising questions about policy traction. Globally, the U.S. dollar index held steady ahead of the Fed’s decision later today, expected to be Jerome Powell’s final meeting as chair before his term ends in May.