FX.co ★ Rupiah Remains Near Multi-Month Lows

The Indonesian rupiah experienced a modest increase, reaching approximately 16,700 per dollar on Friday, following seven consecutive sessions of losses. This improvement was supported by assurances from the central bank. Governor Perry Warjiyo highlighted that Bank Indonesia is prepared to act decisively to ensure stability, referencing ongoing interventions in both offshore and onshore non-deliverable forward markets. He also encouraged market participants to foster a supportive environment. Despite this, the rupiah remains close to its lowest level since April, having depreciated by over 3% this year. While interventions are providing some short-term relief, the currency is under pressure due to aggressive monetary easing, with the central bank having reduced the policy rate by 150 basis points since September 2024, and further cuts anticipated by the markets. There are also concerns regarding Bank Indonesia's independence following its "burden sharing" involvement in funding government expenditures. President Prabowo is pushing forward with an ambitious plan to boost GDP growth to 8% from the current rate of approximately 5%. Concurrently, the dollar index remained above 98.4 after two days of gains, in anticipation of the Federal Reserve’s preferred inflation measure, the PCE price index data.