FX.co ★ Rupiah Firms on Softer Dollar

The Indonesian rupiah appreciated to approximately 16,630 per dollar on Friday, rebounding from a minor decline in the previous session, as the dollar index remained near its lowest point in two months. This movement follows the U.S. Federal Reserve's third interest rate reduction of the year, coupled with a more dovish outlook than anticipated by the markets, thereby increasing the appeal of emerging-market currencies. Additionally, there is growing speculation that Bank Indonesia may maintain its policy rate during the upcoming final meeting for the year, potentially allowing for a resumption of easing measures in 2026.

In other economic news, Indonesia's retail sales are expected to continue their upward trend in November, building on the acceleration observed in October, driven by increased holiday spending. On the trade front, Jakarta is aiming to conclude tariff negotiations with the U.S. by the end of the year, following discussions between chief negotiator Airlangga Hartarto and U.S. Trade Representative Greer to build on the preliminary agreement reached in July.

Despite these developments, the rupiah is still down roughly 3.5% for the year, affected by renewed inflation risks linked to logistics disruptions following the recent disaster in Sumatra.