FX.co ★ Rupiah Strengthens After Solid Trade Data

The Indonesian rupiah strengthened to approximately IDR 16,770 per dollar on Tuesday, marking a recovery after a three-session decline, as positive external data improved market sentiment. Indonesia reported a strong trade surplus for 2025, supported by its 68th consecutive monthly surplus recorded in December. In contrast, the higher inflation seen in January was chiefly influenced by base effects, following last year's electricity tariff discounts, thus reducing immediate policy concerns. Bank Indonesia has recently reaffirmed its commitment to stabilizing the currency through interventions in both the spot and forward markets, alongside liquidity management efforts, while expressing expectations for a gradual recovery of the rupiah. Nevertheless, the currency's upward momentum was limited by the possibility of further monetary easing this year, following a total of 150 basis points in cuts since September 2024, as well as investor caution ahead of fourth-quarter GDP and January's foreign exchange reserves data expected later this week. Internationally, the dollar index remained close to 97.5, buoyed by robust U.S. economic data and President Trump's nomination of Kevin Warsh as the next Federal Reserve chair, a decision perceived as relatively hawkish.