FX.co ★ Rupiah Extends Winning Streak as Dollar Weakens

On Monday, the Indonesian rupiah extended its strengthening trend for the fourth consecutive session, trading close to IDR 16,770 per dollar. This occurred as the U.S. dollar index fell to its lowest level in four months. The weakening of the U.S. dollar is attributed to increasing geopolitical and trade uncertainties, coupled with speculation that President Trump might replace Federal Reserve Chair Powell with a successor who favors looser monetary policies. This speculation has fueled expectations for a more accommodative U.S. monetary stance. Domestically, the sentiment in Indonesia was uplifted by Bank Indonesia's recent decision to maintain its key interest rate at its current level for the fourth meeting in a row, following a total reduction of 150 basis points since September 2024. Additional confidence came from the International Monetary Fund's positive revision of Indonesia's 2026 growth forecast from 4.9% to 5.1%, highlighting the robustness of domestic demand. Nevertheless, the degree of appreciation was tempered by concerns about the independence of the central bank after President Prabowo nominated his nephew to a board position. Meanwhile, officials indicated that there remains potential for additional rate cuts, with inflation projections staying within the targeted range of 1.5% to 3.5% through 2026–2027.