FX.co ★ Rupiah Firms as Dollar Weakness Continues

The Indonesian rupiah strengthened to below IDR 17,800 per U.S. dollar on Thursday, extending its recent gains as the U.S. dollar index hovered near a three-month low. The greenback remained under pressure after the United States announced measures to contain long-term borrowing costs, including expanded bond buybacks. Domestically, Bank Indonesia reaffirmed its commitment to currency stability at its first policy meeting under acting Governor Destry Damayanti, following the abrupt departure of Perry Warjiyo. As expected, the central bank left its key interest rate unchanged at 5.75% for a second consecutive month, signaling policy continuity after a cumulative 100 bp of rate hikes since May. Officials emphasized that the policy mix will continue to prioritize rupiah stability and guard against imported inflation, while liquidity tools will be used to support economic growth. The rupiah has appreciated about 0.4% this week, building on gains from the previous two weeks, though further upside remains constrained by caution ahead of Q2 current account data, after the Q1 deficit widened to its largest since 2019 on weaker trade.