On the first trading day of December, the Indonesian rupiah edged closer to 16,670 against the dollar, marking its decline for the second consecutive session. This occurred following Governor Perry Warjiyo's reaffirmation that there remains leeway for additional rate reductions, despite the previous 150 basis points (bps) of rate cuts executed over the past year, including consecutive reductions in October and November.
In terms of data, Indonesia's trade surplus in October reached its lowest level in seven months, attributed to a drop in exports for the first time in a year and a half due to dampened global demand and escalating U.S. tariffs. Meanwhile, the nation's annual inflation rate eased to 2.72% in November, though it remained close to its highest point since April 2024. Core inflation steadied at 2.36%, the highest level recorded since June.
This year, the rupiah has emerged as the second-worst performer among emerging Asian currencies, having depreciated approximately 3.4%. Nonetheless, losses were mitigated by Warjiyo’s commitment to steering the rupiah toward 16,500 per dollar by the next year, or potentially 16,400. On the global stage, the dollar index was near a two-week low, as traders anticipated the possibility of a final rate cut by the Federal Reserve this year.
