FX.co ★ Indonesia Rupiah Hits New Low amid Thin Trading

The Indonesian rupiah weakened to a fresh record low of around IDR 17,900 per U.S. dollar in thin holiday trade on Thursday, marking a sixth consecutive session of losses. The slide tracked a climb in the U.S. dollar index toward a seven-week high after reports of new U.S. strikes on an Iranian military site dampened hopes for a peace deal, fueling inflation worries and renewed concerns over global interest rates.

Sentiment was also cautious ahead of next week’s release of May inflation and April trade figures. Although inflation in April remained contained, rising energy prices have heightened the risk of renewed price pressures. External demand also looks fragile, with exports falling in March and imports remaining subdued.

The rupiah is on track for a ninth straight weekly decline, down about 0.4% so far this week and 6.4% since the start of the year, placing it among Asia’s worst performers alongside the Indian rupee and Philippine peso. Persistent fiscal pressures and ongoing capital outflows continue to weigh on the currency, despite Bank Indonesia’s larger-than-expected interest rate hike in mid-May.