FX.co ★ Rupiah Weakens Amid Firm Dollar, Domestic Risks

The rupiah slipped toward IDR 17,860 per U.S. dollar on Monday, after briefly firming below IDR 17,810, weighed down by broad dollar strength ahead of this week’s U.S. monthly jobs report. At home, attention is turning to June inflation after the headline rate accelerated to 3.08% in May, approaching the upper end of Bank Indonesia’s 1.5%–3.5% target band amid rising food and energy prices. Export support has weakened, with April’s trade surplus shrinking to its smallest level since 2020. At the same time, governance and transparency concerns lingered after the government inserted a contentious clause into new legislation granting blanket legal immunity for purchases of bonds issued by the state investment fund Danantara. Even so, rupiah losses were contained by a scaled-back version of President-elect Prabowo’s flagship spending program, which signaled continued fiscal discipline. Meanwhile, manufacturing activity has stabilized after a brief contraction, and bank lending remains robust.