FX.co ★ Rupiah Holds Range as Domestic and External Risks Persist

The Indonesian rupiah hovered around IDR 17,900 per U.S. dollar on Monday, trading in a narrow range as traders weighed mixed domestic signals against lingering external risks. August retail sales recorded their fastest expansion in five months, yet consumer confidence slipped back from a recent peak. Inflationary pressures also remained elevated, with headline inflation rising to a three-month high in September and food prices expected to keep upward pressure in place through year-end.

Foreign exchange reserves edged lower but stayed close to a five-month high. Even so, Bank Indonesia faces an increasingly delicate policy trade-off between supporting growth and stabilizing the currency. A persistent current account deficit, coupled with tighter global financing conditions, continues to leave the rupiah exposed to shifts in foreign capital flows. Externally, the U.S. dollar index held firm ahead of key U.S. inflation data, while renewed Houthi attacks on Saudi Arabia added to geopolitical uncertainty and reinforced the cautious tone in financial markets.