The Indonesian rupiah strengthened to below IDR 18,100 per U.S. dollar on Tuesday, rebounding from losses over the previous two sessions, after S&P Global Ratings reaffirmed Indonesia’s investment-grade sovereign rating with a stable outlook. The agency noted that fiscal and external pressures stemming from higher oil prices and rupiah depreciation are expected to be temporary.
Bank Indonesia also underpinned the currency, having raised interest rates by a total of 100 basis points between May and June and pledging to deploy all available policy tools to stabilize the rupiah. On the fiscal side, prospects improved after the House Budget Committee proposed cutting the 2027 allocation for President Prabowo’s free meal program to enhance spending efficiency.
However, the rupiah’s gains were limited by indications of cooling domestic momentum. Oil prices remain elevated, consumer confidence declined for a third consecutive month in June, and retail sales posted their sharpest drop in three years. Externally, the U.S. dollar stayed firm ahead of key inflation releases and Fed Chair Kevin Warsh’s first semiannual testimony before Congress.
