Rupiah Holds Range as Domestic and External Risks Persist

The Indonesian rupiah traded near IDR 17,900 per U.S. dollar on Monday, moving within a limited range as mixed domestic signals and external risks kept sentiment cautious. Retail sales posted their fastest growth in five months in August, but consumer confidence slipped from a recent high. Inflationary pressures also persisted after inflation hit a three-month high in September, with food costs likely to sustain upward pressure through year-end. Foreign exchange reserves eased a bit, but remained near a five-month high. However, Bank Indonesia faces a growing policy trade-off between supporting economic growth and safeguarding the currency. A persistent current account deficit and tighter global financing conditions leave the rupiah vulnerable to shifts in foreign capital flows. Globally, the dollar index remained firm ahead of U.S. inflation data, while renewed Houthi attacks on Saudi Arabia heightened geopolitical uncertainty and added to market caution.