FX.co ★ Rupiah Firms on Fiscal Stimulus, Bank Injection

On Tuesday, the Indonesian rupiah appreciated to approximately 16,370 against the dollar, recovering from 16,415 in the previous session. This recovery was influenced by the government's recent unveiling of a new IDR 16.2 trillion stimulus package scheduled for implementation in the fourth quarter of 2025, with certain measures extending into 2026. New Finance Minister Purbaya Yudhi Sadewa confirmed that this plan would not impact the 2025 budget deficit, projected at 2.78% of the GDP. Last week, the government pumped IDR 200 trillion into five state-owned banks to enhance liquidity, stimulate lending, and foster economic growth. Regarding monetary policy, Bank Indonesia is anticipated to maintain interest rates at 5% on Wednesday, following consecutive reductions in July and August. Earlier this month, the rupiah experienced a dip to a one-month low after the unexpected resignation of Sri Mulyani Indrawati, a respected figure known for her sound fiscal policies, which coincided with nationwide protests. Concurrently, the dollar index remained around 97.3, close to a two-month low, as markets anticipated a potential rate cut by the Federal Reserve.