FX.co ★ Rupiah Sustains Gains

The Indonesian rupiah traded around 16,550 per dollar on Tuesday, continuing its upward trajectory that began earlier in October. This rally has been bolstered by unexpectedly strong trade data for August and a moderate September manufacturing PMI that indicated ongoing factory expansion. Finance Minister Purbaya Yudhi Sadewa underscored the continued collaboration between fiscal and monetary bodies as a key supportive element. Despite this, Bank Indonesia's foreign exchange reserves declined to their lowest in 14 months in September, highlighting intervention efforts to stabilize the currency. Since September 2024, the central bank has implemented a total of 150 basis points in rate cuts to stimulate economic growth, with the potential for further easing possibly limiting any strong rally in the currency. Meanwhile, political challenges stemming from recent widespread protests have also affected market sentiment. In the international arena, the dollar index strengthened amid a prolonged U.S. government shutdown, now in its seventh day. Nevertheless, the rupiah remained robust, buoyed by strong domestic fundamentals that helped counterbalance external pressures and sustain investor confidence.