FX.co ★ Rupiah Falls on Policy Easing Concerns, Credibility Risks

The Indonesian rupiah weakened beyond IDR 16,830 per dollar on Thursday, reversing recent gains as traders turned cautious ahead of Bank Indonesia’s policy meeting next week. Sentiment was weighed down by expectations that the central bank could resume its easing cycle to bolster economic growth, after having cut rates by a cumulative 150 basis points since September 2024. Concerns over policy credibility also resurfaced following the swearing-in of Thomas Djiwandono, President Prabowo’s nephew, as deputy governor earlier this week, prompting renewed scrutiny of the central bank’s independence.

At the same time, external risks persisted, including the prospect of EU scrutiny of Russian oil shipments that could disrupt trade flows. Investors are also awaiting Q4 current account data, after Indonesia recorded its first surplus in nearly two years in Q3. On the global front, the dollar index stayed subdued, even as stronger-than-expected U.S. labor market data tempered expectations for near-term Federal Reserve rate cuts.