Rupiah Extends Gains on Dollar Weakness, Strong Domestic Fundamentals

The Indonesian rupiah hovered around IDR 18,050 per U.S. dollar on Tuesday, up for a second straight session as the dollar index eased further amid stabilising energy prices ahead of U.S. inflation data. The rupiah led regional gains, while most Asian currencies traded in narrow ranges. Lower crude oil prices also eased pressure on Indonesia's import bill. Locally, sentiment was underpinned by resilient economic fundamentals, with the economy expanding by 5.47% yoy in Q3. Meanwhile, consumer confidence climbed to a five-month high in October, and retail sales extended their growth streak to a third month in September, albeit at a slower pace. Simultaneously, Bank Indonesia continued intervening to smooth currency volatility, while forex reserves edged higher in October. However, gains were limited by caution over student-led protests in several major cities this week and concerns about potential foreign outflows ahead of MSCI's November review of Indonesia's equity market.

The Indonesian rupiah traded around IDR 18,100 per U.S. dollar on Monday, remaining in a narrow range since last week. A broadly firmer dollar weighed on the currency after stronger-than-expected U.S. jobs data fueled bets on a further Fed rate hike. Elevated oil prices also weighed on the rupiah, straining fiscal conditions, given Indonesia's status as a net oil importer. Locally, Bank Indonesia continued to intervene to smooth currency volatility, with forex reserves edging higher to USD 146.8 billion in October. Traders awaited MSCI's November review later this week, while its final decision on Indonesia's market classification is expected by June 2027. September retail sales data, due Tuesday, was also in focus after a strong August reading. Political tensions lingered after a wiretapping scandal involving senior police officers, with further protests expected this week. Meanwhile, consumer mood hit a five-month high in October despite persistent job cuts across several sectors.

The Indonesian rupiah weakened to around IDR 18,130 per U.S. dollar on Friday, reversing gains in the prior two sessions as the dollar index firmed ahead of October U.S. jobs data. The currency also tracked losses across Asian peers amid shifts in regional forex markets driven by global risk sentiment and tech-sector volatility. Locally, elevated oil prices continued to weigh on the rupiah by raising import costs and straining fiscal conditions, given Indonesia's status as a net oil importer. Corporate dollar demand added pressure, as major firms, including state-owned enterprises, needed to meet offshore debt obligations, settle energy import bills, and fund capital expenditure. Still, the rupiah remained on track for a modest weekly gain, the first rise in four weeks, lifted by October forex reserves reaching a seven-month high. Sentiment also drew support from stronger-than-expected Q3 GDP growth, reinforcing views that Indonesia could achieve its 2026 growth target of around 5.4%.