FX.co ★ Rupiah Weakness Deepens on Fitch Alert, Trade Gap

The rupiah weakened to around IDR 17,990 per dollar on Thursday, extending its decline for a fourth consecutive session as broad U.S. dollar strength weighed on emerging-market currencies ahead of the key nonfarm payrolls release. Domestic sentiment also deteriorated after Fitch Ratings cautioned that persistent capital outflows or a prolonged drop in foreign exchange reserves could undermine Indonesia’s credit profile, following its decision in March to revise the country’s outlook to negative from stable.

Fresh economic data added to the pressure: Indonesia recorded its first trade deficit since April 2020 in May, as exports unexpectedly contracted while imports continued to grow at a double-digit pace, eroding support from the external balance. Even so, the rupiah’s decline was partially contained by lower global oil prices, which helped ease fiscal pressures, and by a recent pledge from Bank Indonesia to use all available policy tools to stabilise the currency. Meanwhile, June inflation accelerated further, edging closer to the upper end of Bank Indonesia’s 1.5%–3.5% target range.