Rupiah Set for Monthly Loss Despite Quarterly Gain

The Indonesian rupiah hovered near IDR 17,850 per U.S. dollar on the last trading day of September, rising for a second session after Bank Indonesia emphasised consistent, sustainable interventions and noted its trajectory stayed in line with regional peers. The central bank has shifted its strategy by reducing spot-market interventions to 30% and focusing more on NDFs. Fiscal clarity also improved as Parliament passed the 2027 Budget Bill. Gains were capped, however, as the dollar index stayed firm amid persistent U.S. inflation and hawkish Fed signals. The rupiah is on track to post a monthly drop of about 0.6%, pressured by domestic inflation after annual CPI accelerated to 3.19% in August on higher food costs linked to El Niño. External risks also lingered, with elevated crude prices posing fiscal challenges for energy-import-reliant Indonesia. Still, the rupiah is on track to strengthen for the quarter, up around 0.6% so far, recovering part of its 5.7% drop in the prior period.