FX.co ★ Rupiah Slips for 3rd Session

The Indonesian rupiah depreciated to approximately 16,700 on Monday, marking its third consecutive session of losses. This decline comes amidst moderate foreign capital outflows observed in the first week of December. Investor sentiment has turned cautious in anticipation of significant domestic data releases scheduled this week, which include November’s consumer sentiment figures and retail sales data for October. Bank Indonesia has recently indicated potential for additional rate cuts, having already reduced interest rates by 150 basis points since September 2024, with consecutive cuts in both October and November. This dovish approach has sparked concerns regarding inflationary pressures potentially escalating in the coming months, attributed to disrupted logistics resulting from severe floods and landslides in Sumatra in late November, which rank among the country's most severe natural disasters in over a decade. Nonetheless, an increase in November’s foreign exchange reserves, reaching a three-month peak for the second consecutive month, has aided in curbing further currency depreciation. On the international front, the dollar index remained subdued as speculation increased over the Federal Reserve's potential rate cuts this week, driven by signs of a cooling U.S. labor market.