Rupiah Set for Another Monthly Loss, Quarterly Drop around 5%

The rupiah slipped toward IDR 17,900 per dollar on Tuesday, extending prior losses as the U.S. dollar index stayed firm on expectations of further Fed tightening. Markets largely brushed aside remarks from a Bank Indonesia senior official, who pledged to deploy all available tools to stabilise the rupiah. Traders also paid little attention to resilient foreign inflows into government bonds and Bank Indonesia securities, totaling around USD 9 billion through end-June. Lower oil prices, retreating toward pre-Iran conflict levels, likewise did little to support the rupiah despite easing fiscal concerns as the government trims President Prabowo's flagship programs. Focus turned to local data due later this week, where May’s annual inflation accelerated, edging near the upper end of the central bank's target. On the trade front, April’s surplus notched its smallest since 2020, reducing export support. The rupiah is set to continue its recent monthly drop, with a quarterly fall of around 5%.