FX.co ★ Rupiah Flat, on Track for Modest Weekly Decline

The Indonesian rupiah traded around IDR 17,960 per U.S. dollar on Friday, roughly unchanged from the previous session as investors awaited key domestic data due next week, including June foreign exchange reserves, consumer confidence, and May retail sales. Market sentiment stayed cautious after Fitch Ratings warned that a prolonged decline in FX reserves could weigh on Indonesia’s credit profile, with reserves having fallen to their lowest level in nearly two years in May.

At the same time, Bank Indonesia reiterated its commitment to using all available policy tools to support the currency, even as strong foreign inflows into government bonds and Bank Indonesia securities continued in June. On the external front, the U.S. dollar index inched lower after weaker-than-expected U.S. labor market data reduced expectations of further Federal Reserve tightening this year. For the week, the rupiah is on track for a modest loss of about 0.3%, pressured by Indonesia’s first trade deficit since April 2020 and a sharp contraction in manufacturing activity.