24.06.202603:58:49UTC+00Rupiah Weakness Persists as Inflation Risks Loom

The Indonesian rupiah weakened to around IDR 17,950 per U.S. dollar on Wednesday, extending its losing streak to a fourth consecutive session. The decline came as the U.S. dollar index hovered near a 14‑month high amid expectations of further Federal Reserve tightening. Risk-off sentiment intensified following a sharp sell-off in global tech stocks, bolstering demand for safe-haven assets.

Domestically, investor caution increased ahead of June’s inflation data due next week, amid concerns that elevated food prices could keep overall price pressures high. Annual inflation accelerated to 3.08% in May from 2.42% in April, driven by rising staple food costs and higher logistics expenses.

At the same time, Indonesia’s trade surplus narrowed in April to its smallest level since 2020, diminishing support from export-driven foreign exchange inflows. Market sentiment was further weighed down by reports that major Japanese automakers may shift part of their production to Vietnam, stoking worries about future investment, employment, and the manufacturing outlook.

Even so, expectations of continued policy tightening by Bank Indonesia— which has raised interest rates by a cumulative 100 basis points since May—helped to limit the rupiah’s losses.