FX.co ★ Rupiah Gains Ahead of Key BI Policy Meeting

The Indonesian rupiah strengthened further on Monday, trading just below IDR 17,800 per U.S. dollar around midday in thin holiday conditions as markets observed Independence Day. At the same time, the U.S. dollar index extended its recent decline after softer U.S. economic data reinforced expectations that the Federal Reserve is more likely to ease policy than maintain higher-for-longer interest rates. Domestically, sentiment was buoyed by prospects of policy continuity under acting Governor Destry Damayanti, the sole nominee to head Bank Indonesia. The central bank will hold its first policy meeting starting Tuesday, the first since Perry Warjiyo stepped down last month. Bank Indonesia had raised rates by a cumulative 100 bps in May and June to support the rupiah. Meanwhile, foreign exchange reserves were broadly stable in July, highlighting resilient external buffers. Fiscal optimism also underpinned the currency after President Prabowo projected GDP growth could reach 6% next year, alongside commitments to build a fiscal buffer and accelerate debt reduction, moves that could strengthen confidence in Indonesia’s fiscal position.