Rupiah strengthens as dollar weakens; reserves rise
Indonesian rupiah strengthened below IDR 17,650 per U.S. dollar on Tuesday, reversing prior losses as broad dollar weakness supported FX. August forex reserves hit a five-month high, though inflation concerns and food-price pressure capped gains.
S. dollar on Tuesday, reversing earlier losses as broad dollar weakness supported the currency. Yen gains on expectations of more aggressive BoJ tightening and continued carry-trade unwinding also reinforced the wider FX move. Domestically, sentiment improved after Finance Minister Purbaya Yudhi Sadewa said GDP growth would remain solid in Q3 and Q4 despite recent natural disasters, and said the state budget faced no significant risks.
Stronger external buffers also supported the rupiah, with August forex reserves reaching a five-month high. 19% in August. Investors remained cautious ahead of August consumer confidence data due Wednesday and retail sales later in the week.