03.08.202606:01:36UTC+00Rupiah Strengthens Further on Softer Dollar, BI Policy Support

The Indonesian rupiah traded just below IDR 18,000 per U.S. dollar on the first trading day of August, extending its rally to a fourth consecutive session as the dollar weakened further following Japan’s confirmed yen-buying intervention. Domestically, headline inflation slowed to 2.88% in July, a three-month low and comfortably within Bank Indonesia’s 1.5%–3.5% target range, reinforcing expectations that price pressures remain contained.

Bank Indonesia reiterated its commitment to currency and financial market stability using a broad policy mix beyond interest rates, including spot FX intervention and the use of onshore and offshore NDFs to manage liquidity and attract foreign capital, complementing a cumulative 100 bps of rate hikes since May. However, rupiah gains were tempered by external concerns after June’s persistent trade deficit, driven by a sharp rise in imports. Political uncertainty also lingered, as President Prabowo has yet to nominate candidates for central bank governor following Perry Warjiyo’s abrupt departure.