Rupiah firms ahead of Bank Indonesia policy meeting

The Indonesian rupiah firmed further, hovering just below IDR 17,800 per U.S. dollar around midday Monday in thin holiday trading as markets observed Independence Day.

Meanwhile, the dollar index extended its recent decline after softer U.S. data reinforced expectations the Fed may ease policy rather than keep rates higher for longer.

Locally, sentiment was supported by continuity prospects under acting Governor Destry Damayanti, the sole nominee to lead Bank Indonesia.

The central bank will begin its first policy meeting Tuesday, the first time since Perry Warjiyo’s departure last month.

BI had raised rates by 100bps in May and June to help the rupiah.

Meantime, forex reserves stayed broadly stable in July, underscoring resilient external buffers.

Fiscal optimism also lent support after President Prabowo said that GDP growth could reach 6% next year, with pledges to build a fiscal buffer and accelerate debt reduction, potentially improving credibility in Indonesia’s fiscal position.