FX.co ★ Rupiah Gains After Two-Session Slide

The Indonesian rupiah demonstrated strength, trading just below 16,700 per dollar on Monday. This follows its previous sessions where it dipped past 16,730. The currency's rebound was influenced by Bank Indonesia's decision to hold interest rates steady in consecutive meetings last week. This decision reflects a belief that inflation will remain manageable within the targeted range of 2.5% ±1% both this year and the next. Additionally, this move aims to stabilize the currency and bolster foreign portfolio investments, even though the dollar index hovers near a six-month peak following comments from New York Fed President John Williams. He noted that a near-term U.S. rate cut remains plausible due to labor market uncertainties. Furthermore, Indonesia's current account transitioned to a surplus in the third quarter, marking its first surplus in two and a half years and its highest since the third quarter of 2022. This was propelled by an increase in the non-oil trade surplus and stronger secondary income, giving an additional boost to the rupiah. Despite these positive developments, the rupiah has declined approximately 3.8% against the dollar year-to-date. The central bank has hinted at potential for further easing, having already implemented 150 basis points of cuts over the past year.