Rupiah Firms Further After Strong GDP Data

The Indonesian rupiah hovered around IDR 18,080 per U.S. dollar on Thursday, up for a second straight session as the dollar index continued to fall, with traders remaining focused on the implications of Democratic wins in the U.S. midterm elections. Locally, sentiment found support from stronger economic data, with Q3 GDP growth accelerating to 5.47% yoy, beating expectations on resilient private consumption and solid manufacturing output. The 2026 state budget targets 5.4% growth, although Finance Minister Suahasil recently indicated that expansion could slightly top the target, reaching 5.5%. Meanwhile, Bank Indonesia's two-stage reserve requirement reduction for commercial banks took effect on Nov. 1, lowering the ratio to 8% from 9%, with a further cut to 7% scheduled for Dec. 1. The measures are expected to inject around IDR 190 trillion into the banking system to support lending without compromising rupiah stability. Investors now await October forex reserves data due Friday.

The Indonesian rupiah traded around IDR 18,130 per U.S. dollar on Wednesday, remaining near that level since last week and struggling to strengthen toward the 18,000 mark despite the dollar index falling to a five-week low. The greenback weakened as traders monitored incoming U.S. midterm election results, with early polls pointing to a potentially strong performance by Democrats. Domestic concerns continued to weigh on sentiment, as Finance Minister Suahasil Nazara lowered the 2026 growth projection to 5.4%–5.5% from 5.6%–6%, ahead of Q3 GDP data due Thursday. Growth is expected to slow further yoy from 5.29% in Q2. Meanwhile, higher oil prices, rising imports, and volatile export earnings added to fiscal and external pressures. On the policy front, Bank Indonesia said its currency interventions had been effective, while Governor Destry reaffirmed the central bank's commitment to maintaining an active market presence, with greater reliance on NDFs to reduce costly spot interventions.

The Indonesian rupiah firmed, hovering around IDR 18,130 per U.S. dollar on Tuesday after briefly touching IDR 18,200 in the prior session. Sentiment improved amid a stronger-than-expected September trade surplus, though imports grew faster than exports. Meanwhile, headline inflation eased slightly in October, remaining within Bank Indonesia's target range despite accelerating food prices amid El Niño-related supply disruptions. Indonesia's manufacturing sector also improved last month, with output, new orders, and export sales posting robust growth. However, overall sentiment remained cautious amid fiscal pressures from higher oil prices and exposure to volatile export earnings and shifting external demand. BI has reiterated its commitment to enhancing policy coordination with the government while maintaining a policy mix to support the rupiah. Globally, the dollar index steadied as traders assessed geopolitical risks and political uncertainty while awaiting U.S. labor-market data.