FX.co ★ Rupiah Set for Another Monthly Loss, Quarterly Drop around 5%

The rupiah weakened toward IDR 17,900 per dollar on Tuesday, extending its recent slide as the U.S. dollar index remained firm amid expectations of further Federal Reserve tightening. Markets largely shrugged off comments from a senior Bank Indonesia official, who vowed to use all available policy tools to stabilise the currency. Investors also appeared unmoved by steady foreign inflows into government bonds and Bank Indonesia securities, which reached about USD 9 billion through the end of June.

Falling oil prices, which have pulled back toward pre-Iran conflict levels, likewise offered little support to the rupiah, even as they help ease fiscal pressures at a time when the government is scaling back President Prabowo’s flagship programmes. Attention has now shifted to domestic data due later this week: May’s annual inflation rate accelerated and is edging close to the upper bound of Bank Indonesia’s target range. On the external front, April’s trade surplus narrowed to its smallest level since 2020, weakening export-driven support for the currency. The rupiah is on track to extend its monthly decline, with a quarterly loss of around 5%.