FX.co ★ Rupiah Firms on Foreign Inflows, Steady Reserves

The Indonesian rupiah strengthened to around IDR 17,900 per U.S. dollar on Friday, edging higher after the previous session’s losses as renewed foreign inflows into government bonds and domestic equities in July broke several months of sustained outflows. Market sentiment was further supported by contained domestic inflation, with July’s headline rate easing to a three-month low, helped by government food price stabilisation measures and the ongoing harvest season in parts of Java. Fresh data also indicated that Indonesia’s foreign exchange reserves remained broadly stable in July, highlighting the resilience of the country’s external buffers. Meanwhile, the U.S. dollar index was little changed as investors awaited the closely watched July U.S. nonfarm payrolls report for clearer signals on labor market conditions and the Federal Reserve’s policy outlook. For the week, the rupiah was on track for its first weekly gain in three, up about 0.5% so far, underpinned by improved fiscal sentiment after President Prabowo’s administration recently announced significant cuts to its flagship spending program.