FX.co ★ Rupiah Strengthens Further to Three-Week High

Indonesia’s rupiah strengthened to below IDR 17,700 per U.S. dollar on Monday, its firmest level in three weeks, as broad-based dollar weakness lifted emerging-market currencies. The dollar index fell to its lowest point in more than a week after the United States and Iran reached a peace agreement in the Middle East, reducing demand for safe-haven assets.

On the domestic front, investors positioned ahead of Bank Indonesia’s policy meeting later this week, amid expectations the central bank will maintain its tightening bias following a cumulative 75 basis points of rate hikes since May. Sentiment was further supported by a series of stabilization measures, including Deputy House Speaker Sufmi Dasco’s public call for citizens to sell their dollar holdings. At the same time, officials emphasized that channeling export proceeds through a state-owned institution would not disrupt commodity pricing or existing contracts.

Still, the rupiah’s advance was limited by lingering structural weaknesses: a decline in foreign exchange reserves in May, softer consumer confidence, weaker retail sales in April, higher costs for non-subsidized fuel, and ongoing concerns over labor market conditions.