Rupiah Eases Ahead of BI Forex Reserves Data

The Indonesian rupiah traded around IDR 17,900 per U.S. dollar on Thursday, edging lower as caution emerged ahead of Bank Indonesia's July foreign exchange reserves release on Friday, after briefly strengthening to IDR 17,835 in the previous session. Meanwhile, external concerns lingered after Indonesia posted another trade deficit in June, driven by surging crude oil imports. Still, losses were limited by a softer U.S. dollar, as the partial reopening of the Strait of Hormuz weighed on oil prices, helping curb inflation concerns and reducing expectations for further Fed tightening. The rupiah remained up about 0.4% for the week, aided by softer July inflation following government food stabilisation measures and the harvest season in parts of Java. Foreign inflows into government bonds also helped underpin the currency, while overseas investors returned as net buyers of domestic equities in July after several months of sustained selling.

The Indonesian rupiah firmed to around IDR 17,930 per U.S. dollar on Wednesday afternoon after briefly slipping near IDR 18,050 in the prior session. Support came from a softer greenback after reports of a possible interim U.S.–Iran deal to reopen the Strait of Hormuz sent oil prices tumbling, easing inflation risks and trimming expectations for further rate hikes. Domestically, sentiment brightened as Q2 GDP expanded 5.29% yoy, beating forecasts despite slowing from Q1. On a quarterly basis, output jumped 3.73%, the fastest in a year, rebounding from a 0.77% drop in Q1. Inflation also cooled to 2.88% in July, a three-month low and well within Bank Indonesia’s target band. However, gains were capped by concerns over external balances amid a persistent trade gap in June following a surge in crude imports. Traders also stayed cautious amid leadership uncertainty at Bank Indonesia after Perry Warjiyo’s abrupt exit, with markets awaiting President Prabowo’s choice for the next governor.

The Indonesian rupiah weakened past IDR 18,000 per U.S. dollar on Tuesday, snapping a four-session winning streak as concerns over the country's external balance resurfaced. Sentiment was pressured after Indonesia posted another trade deficit in June, largely driven by a surge in crude oil imports amid elevated global energy prices. Nerves also grew ahead of Q2 GDP data due Wednesday, with economic growth expected to slow from the strong 5.6% yoy rise in Q1. Still, the rupiah's losses were limited after July inflation eased to a three-month low of 2.88%, comfortably within the central bank's target range of 1-1/2-3-1/2%. Traders remained focused on President Prabowo's upcoming nominations for Bank Indonesia governor following Perry Warjiyo's abrupt exit. Finance Minister Purbaya Yudhi reportedly said he would not seek the position. Globally, the U.S. dollar steadied as investors continued to assess the outlook for Fed policy amid persistent uncertainty about the Middle East conflict.