The Indonesian rupiah inched closer to IDR 17,000 per US dollar on Tuesday, weakening for a sixth straight session as the greenback remained firm amid elevated global energy prices ahead of the Federal Reserve’s policy decision. Indonesia, a net importer of oil and gas, is particularly exposed to rising energy costs, although authorities have pledged to keep subsidized fuel prices unchanged through the Eid holiday. Still, a prolonged period of high oil prices could eventually force price adjustments.
Inflation rose to 4.76% in February, its highest level in nearly three years and above Bank Indonesia’s target, largely due to base effects from last year’s electricity tariff discounts. The central bank is scheduled to announce its policy decision later today, with markets widely expecting a sixth consecutive pause. Nonetheless, speculation about further easing persists following a cumulative 150 basis points of rate cuts since September 2024, implemented to support growth after disruptions in Sumatra.
Indonesia’s economy expanded by 5.11% in 2025, undershooting the government’s 5.2% target, while growth in 2026 is projected at 5.4%.