FX.co ★ Rupiah on Track for 3rd Consecutive Weekly Rise

The Indonesian rupiah strengthened to around IDR 17,720 per U.S. dollar on Friday, extending its recent rally and poised for a third consecutive weekly gain. The move came as the U.S. dollar index hovered near multi-month lows amid mounting uncertainty over the U.S. Treasury’s bond buyback plans. Domestically, sentiment was supported by strong credit expansion, with loan growth accelerating to 13.58% year-on-year in July, exceeding Bank Indonesia’s 8–12% target range for end-2026. At its first policy meeting chaired by acting Governor Destry Damayanti, the central bank reiterated its focus on maintaining currency stability, keeping the benchmark rate unchanged at 5.75% for a second straight month after a cumulative 100 bps in hikes since May. Still, rupiah gains were tempered by external headwinds: fresh data showed a record current account deficit in Q2, driven by a persistent trade shortfall as oil imports surged in response to the Middle East conflict. Risks of El Niño-fueled food inflation also highlighted ongoing cost pressures, despite headline inflation easing in July to a three-month low.