FX.co ★ Rupiah Eases After Recent Gains

The Indonesian rupiah edged lower to around IDR 17,250 per dollar on Tuesday, trimming part of the gains made over the previous two sessions. The modest pullback came despite a further decline in the U.S. dollar index, pressured by renewed diplomatic efforts to ease U.S.–Iran tensions.

Investor caution increased ahead of key domestic data due later this week, including April inflation and March trade figures. While March CPI slowed to 3.48%, upside risks persist due to higher global oil prices. At the same time, February’s trade surplus undershot expectations as imports jumped, stoking concerns about the country’s external balances.

Fiscal worries also resurfaced amid reports of dwindling government cash buffers and rising debt service costs, amplifying fears of mounting financial strains. Even so, downside pressure on the rupiah was limited by Bank Indonesia’s strong commitment to currency stability. The central bank left interest rates unchanged for a seventh consecutive meeting last week, and Governor Perry Warjiyo emphasized that the rupiah remains undervalued relative to its fundamentals, suggesting room for further recovery.