The Indonesian rupiah strengthened to around IDR 16,750 per dollar on Thursday, extending the previous session’s gains as the dollar index continued to decline amid ongoing uncertainty over U.S. tariff policy.
On the domestic front, Bank Indonesia kept its benchmark interest rate unchanged at 4.75% earlier this month for a fifth consecutive meeting, following a total of 150 basis points in rate cuts since September 2024. The central bank said the decision was intended to support the rupiah and improve monetary policy transmission. It also highlighted that ample foreign exchange reserves in January will help underpin efforts to stabilize the currency, with markets now looking ahead to February inflation data and January trade figures due next week.
So far this week, the rupiah has gained about 0.8%, supported by improved fiscal room after tax revenues surged 30.7% year-on-year by the end of January, driven by fewer tax refunds and stronger compliance. However, expectations of further monetary easing have capped the currency’s upside, as authorities maintain a pro-growth stance under President Prabowo after 2025 GDP growth came in below the official 5.2% target.
