FX.co ★ Rupiah Extends Weakness Ahead of U.S. Inflation Data

The Indonesian rupiah extended its losses on Wednesday, trading near IDR 17,870 per U.S. dollar, as the dollar index firmed ahead of key U.S. inflation data that could influence expectations for the Federal Reserve’s next policy move. Domestically, sentiment remained under pressure amid soft fundamentals, with both retail sales and consumer confidence subdued in July.

Investor attention is now turning to Bank Indonesia’s policy meeting next week, the first since Perry Warjiyo stepped down last month. Acting Governor Destry Damayanti has been nominated as the sole candidate to head the central bank. BI has raised its policy rate by a cumulative 100 basis points in May and June in an effort to stabilize the rupiah.

At the same time, contained price pressures are giving policymakers some room for maneuver. Indonesia’s inflation eased to a three-month low of 2.88% in July, remaining within the central bank’s target range. The rupiah also drew some support from expectations of policy continuity, with lawmakers widely anticipated to approve Destry’s appointment without major hurdles, likely after the Independence Day celebrations.