FX.co ★ Rupiah Weakens Ahead of Market Reopen

The Indonesian rupiah weakened toward IDR 16,920 per dollar on Tuesday, after briefly touching 16,860 in the previous session, as the US dollar index firmed amid escalating tensions in the Middle East. Domestically, markets will reopen on Wednesday following the Eid holidays, with sentiment expected to remain cautious. As a net importer of oil and gas, Indonesia is vulnerable to rising energy costs. Although authorities have pledged to keep subsidized fuel prices unchanged during the festive period, persistently high oil prices may ultimately necessitate policy adjustments. Inflation accelerated to 4.76% in February, its highest level in nearly three years and above Bank Indonesia’s 1.5%–3.5% target range. Even so, rupiah losses were limited by the prospect of new measures to curb currency speculation, set to take effect on April 1. Last week, the central bank left its benchmark rate unchanged at 4.75% for a sixth consecutive meeting, abandoning earlier hints of easing and signaling a more cautious policy stance.