FX.co ★ Rupiah Holds Near Multi-Month Lows Despite Government Optimism

The Indonesian rupiah has shown a decline, reaching approximately IDR 16,880 per dollar on Thursday, thus widening losses experienced in the previous day and nearing a nine-month low. The market sentiment remains delicate amidst anticipation of additional monetary easing, as Bank Indonesia gears up for its initial policy meeting of the year. Investors have largely overlooked statements from Finance Minister Purbaya Yudhi Sadewa, who expressed confidence in a strengthening rupiah, attributing it to a gradual economic recovery. Instead, market attention has shifted toward the inflationary pressures that surfaced in December following the late November calamity in Sumatra. From September 2024 to September 2025, the central bank orchestrated a total rate cut of 150 basis points, facilitated by a subdued inflation environment. The GDP figures for the fourth quarter, expected in early February, follow a third-quarter growth rate of 5.04% year-over-year, a slight decline from the second quarter's 5.12%, attributed to weaker consumer spending. This growth rate is highlighted by top central banker Perry Warjiyo as being below the nation’s potential. On the international front, the dollar index remains stable above 99 as traders assess recent U.S. economic data amidst ongoing concerns regarding the Federal Reserve's autonomy.