Rupiah Eases Slightly

The Indonesian rupiah strengthened to around 16,630 per dollar on Friday, swinging from a slight dip in the prior session as the dollar index hovered near two-month lows.

The U.S. Fed’s third rate cut of the year, accompanied by a less hawkish outlook than markets expected, boosted demand for emerging-market currencies.

Bets also grew that Bank Indonesia will keep its policy rate at next week’s final meeting of the year, leaving room to resume easing in 2026.

Meanwhile, Indonesia’s retail sales are projected to extend gains in November after October’s acceleration, lifted by stronger holiday spending.

On the trade front, Jakarta seeks to finalize tariff negotiations with the U.S. by year-end following talks between chief negotiator Airlangga Hartarto and U.S. Trade Representative Greer to advance July’s preliminary deal.

Still, the rupiah remains down about 3.5% year-to-date, pressured by inflation risks tied partly to logistics disruptions after the recent disaster in Sumatra.

The Indonesian rupiah firmed toward 16,680 per dollar on Tuesday, snapping a three-day losing streak after briefly climbing above 16,700.

Support strengthened after Bank Indonesia reiterated confidence in the external sector, citing resilient exports and stable foreign inflows.

The central bank kept its policy rate at 4.75% in November for a second straight meeting after 150bps of cuts since September 2024, while signaling a near-term focus on currency stability and smoother policy transmission.

Further support came as consumer confidence rose for a second month to a nine-month high in November, helped by expanded year-end cash handouts.

However, gains were capped as traders turned cautious ahead of October retail sales data following five months of growth.

Inflation risks also lingered due to logistics disruptions from late-November floods and landslides in Sumatra.

Globally, the dollar index was steady as investors awaited the Federal Reserve’s final policy meeting of the year.

The Indonesian rupiah weakened around 16,700 on Monday, extending losses for a third session amid modest foreign outflows in the first week of December.

Sentiment also turned cautious ahead of key domestic data releases this week, including November consumer mood and October retail sales.

Bank Indonesia recently signaled room for further rate cuts, even after lowering borrowing costs by 150bps since September 2024, including back-to-back moves in October and November.

The dovish stance has raised concern as inflation risks may rise in the coming months due to disrupted logistics following late-November floods and landslides in Sumatra, among the country’s most damaging natural disasters in more than a decade.

Still, stronger November forex reserves, which rose for a second month to a three-month high, helped limit further downside.

Externally, the dollar index held losses as expectations grew that the Federal Reserve would cut rates this week amid cooling U.S. labor markets.

The Indonesian rupiah was little changed on Friday, steadying around 16,660 per dollar after central bank data showed forex reserves rose for a second straight month in November to the highest level since August. The increase came despite ongoing intervention to stabilize the currency amid heightened financial market uncertainty heading into year-end.

Traders also awaited key domestic releases next week, including November consumer sentiment and October retail sales.

Earlier this week, Governor Perry Warjiyo said Bank Indonesia aims to guide the rupiah toward 16,500 per dollar next year, or potentially 16,400, while signaling there is still room for further rate cuts after 150bps since September 2024.

On the global front, the US dollar index steadied around 99 as markets awaited delayed September PCE data, the Fed’s preferred inflation gauge, ahead of next week’s final FOMC meeting of the year and the scheduled leadership transition at the Federal Reserve in May 2026.

The Indonesian rupiah weakened toward 16,650 on Thursday, reversing a slight rise in the prior session amid caution ahead of November’s forex reserve data due Friday.

Reserves have hovered near a 14-month low as capital outflows persist and import payments remain elevated, keeping pressure on the currency.

Meanwhile, Bank Indonesia recently signaled that room for further rate cuts remains, even after delivering 150bps of reductions since September 2024, including back-to-back moves in October and November.

The rupiah has been one of the region’s weakest performers so far this year, down about 3.4% year-to-date.

Still, policymakers aim to guide the currency toward 16,500 per dollar next year, or even 16,400, supported by steady policy support from the central bank and more stable fund flows.

Globally, the dollar index hovered at its lowest level in over a month as softer U.S. labor data strengthened expectations of a Federal Reserve rate cut next week.

The Indonesian rupiah weakened toward 16,670 per dollar on the first trading day of December, slipping for a second session after Governor Perry Warjiyo reiterated that there is room for further rate cuts, even after 150bps of easing over the past year, including back-to-back moves in Oct. and Nov.

On the data front, Indonesia’s trade surplus hit a seven-month low in Oct., as exports fell for the first time in 1-1/2 years amid weak global demand and rising U.S. tariffs.

Meantime, the country's annual inflation eased to 2.72% in November but stayed near its highest since April 2024, while core inflation held steady at 2.36%, the highest since June.

The rupiah is the second-worst performer in emerging Asia this year, so far down about 3.4%.

Still, losses were capped by Warjiyo’s pledge that he aims to guide the rupiah toward 16,500 per dollar next year, or even 16,400.

Globally, the dollar index hovered near a two-week low, as traders braced for a possible final Fed rate cut this year.