FX.co ★ Rupiah Inches Up as BI Signals FX Support

The Indonesian rupiah inched higher toward IDR 17,850 per U.S. dollar on Tuesday, snapping an eight-session losing streak after Bank Indonesia pledged to intervene to maintain orderly market conditions. Officials signaled they would deploy a range of tools, including offshore and onshore NDFs, spot FX transactions, and secondary-market government bond purchases.

The central bank also opened its two-day policy meeting, with local media and analysts broadly expecting it to leave interest rates unchanged as it continues to rely on FX operations and central bank securities to stabilize the currency. Borrowing costs have been on hold for two months, following a cumulative 100 bps in rate hikes since May.

On the fiscal front, Finance Minister Suahasil Nazara called for a constructive debate on the statutory 3% budget-deficit ceiling, after lawmakers pressed to amend the 2003 State Finance Law to allow larger deficits in support of social programs.

The rupiah’s advance was limited, however, by a stronger U.S. dollar trading near a two-month high, as hawkish comments from Federal Reserve officials reinforced expectations that U.S. interest rates will remain higher for longer.