FX.co ★ Pressure on Rupiah Persists amid Strong Dollar, Energy Risks

The Indonesian rupiah hovered near IDR 17,050 on Monday, extending its decline for a third consecutive session as the U.S. dollar strengthened amid rising tensions with Iran, following President Trump’s new deadline and sharper rhetoric toward Tehran. Prolonged energy shocks threaten to push inflation higher in Southeast Asia’s largest economy and to worsen the current account balance through a more expensive import bill.

External buffers also showed signs of strain. The February trade surplus narrowed as exports softened and imports remained elevated. On inflation, the March reading slipped back into Bank Indonesia’s 1.5%–3.5% target band after February’s 4.76% print, but risks remain tilted to the upside. Investors were also awaiting March foreign reserves data after a decline in February took reserves to a three-month low.

In the medium term, sustained commodity pressures could add to fiscal burdens as President Prabowo pushes forward with his flagship programs. Even so, downside pressure on the rupiah has been partially contained by expectations that Bank Indonesia will proceed cautiously after delivering 150 basis points of rate cuts since September 2024.