FX.co ★ Rupiah Drifts Lower Ahead of Forex Reserve Update

The Indonesian rupiah declined towards the 16,650 mark on Thursday, reversing a modest gain from the previous session. This movement comes amid investor caution ahead of the anticipated release of November's foreign exchange reserve data scheduled for Friday. Currently, the reserves are nearing their lowest in 14 months due to ongoing capital outflows and high import payments, which continue to exert pressure on the currency. Bank Indonesia has recently indicated the possibility of further interest rate cuts, following a total reduction of 150 basis points since September 2024, including successive cuts in October and November. This year, the rupiah has been one of the weakest currencies in the region, registering a 3.4% decline so far. Despite this, policymakers are targeting a stronger rupiah, aiming to steer it toward 16,500 per dollar, or even 16,400, supported by consistent central bank policies and more stable capital flows. On the global stage, the dollar index reached its lowest point in over a month, influenced by weaker U.S. labor data that heightened expectations of a Federal Reserve rate cut in the coming week.