Rupiah strengthens as softer US inflation weakens dollar

Jakarta (ANTARA) - The Indonesian rupiah strengthened by five points, or 0.03 percent, to Rp18,063 per US dollar on Thursday morning trading, up from its previous close of Rp18,068 on Wednesday afternoon (July 15).

Researcher at the Indonesia Commodity and Derivatives Exchange (ICDX) Muhammad Amru Syifa told ANTARA here on Thursday that the rupiah was supported by positive market sentiment following a recent statement from the central bank, Bank Indonesia (BI).

"There are no major economic data releases directly affecting the rupiah's movement today. However, positive sentiment emerged from Bank Indonesia's statement, confirming that it has intensified exchange rate stabilization measures through interventions in the offshore Non-Deliverable Forward (NDF) market since April 2026," Syifa said.

The central bank is also continuing to monitor the foreign exchange market through its overseas representative offices while expanding its monetary operation instruments.

These measures have reassured market participants that BI possesses adequate policy tools to maintain the rupiah's stability amid global economic uncertainty.

Furthermore, the rupiah also gained support from a weaker US dollar following the release of the latest US Consumer Price Index (CPI) data.

As reported by Anadolu, US annual consumer inflation slowed to 3.5 percent in June 2026, falling below market expectations, as a sharp drop in energy prices triggered the steepest monthly decline since April 2020. The annual inflation rate decelerated from 4.2 percent in May 2026.

The US CPI declined 0.4 percent in June from the previous month, following a 0.5 percent increase in May. Meanwhile, core inflation remained flat monthly, but slowed to an annual rate of 2.6 percent, down from 2.9 percent in May.

"This strengthens market expectations that the Federal Reserve has room to ease its monetary policy. Such conditions suppress demand for the US dollar and provide room for emerging market currencies, including the rupiah, to appreciate," Syifa said.

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Translator: M Baqir Alatas, Uyu Liman

Editor: Bayu Prasetyo

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