FX.co ★ Rupiah Eases Amid Dollar Strength

The Indonesian rupiah weakened toward IDR 17,980 per U.S. dollar on Thursday, retreating after briefly firming below IDR 17,900 in the previous session. The currency faced renewed pressure as the U.S. dollar index hovered near a two-month high, with investors turning to safe-haven assets in the wake of fresh U.S. strikes on Iran. Domestically, sentiment deteriorated after new data showed that annual retail sales declined in April for the first time in a year, highlighting the impact of higher non-subsidized fuel prices on household spending. Traders largely brushed aside Bank Indonesia’s forecast that the rupiah could appreciate to the 16,800–17,500 range next year, keeping their attention instead on near-term inflation risks and the prospect of further policy tightening. Ahead of next week’s policy meeting, Governor Perry Warjiyo said the board is still considering whether another rate hike is warranted, following a cumulative 75 bps of increases since May, and emphasized that any additional moves will depend on incoming data and market conditions.