Indonesian Rupiah moves little as US Dollar (USD) remains steady amid safe-haven demand
USD/IDR remains steady after registering minor gains in the previous day, trading around 17,930 during the European hours on Tuesday.
The Indonesian Rupiah exhibited minimal movement as the US Dollar maintained stability, driven by a surge in safe-haven demand stemming from heightened geopolitical tensions. Reports emerged that the Yemeni Houthi group had carried out coordinated missile and drone attacks on Saudi military installations, an oil facility, and major airports, causing investors to turn to traditional safe-haven assets like the US Dollar.
The US Dollar strengthened due to a notable rally in US Treasury yields, which had reached record highs, fueled by global bond selloffs resulting from mounting fiscal deficits and persistent inflation. Data from ISM further reinforced inflation fears, revealing that input costs in the US services sector surged at their highest rate in over four years.
Analysts noted that the dollar benefited from the euro's weakness and persistent high bond yields, though strong equity performance curtailed dollar gains and allowed some high-beta currencies to outperform. Traders anticipated key economic releases from Indonesia, including foreign exchange reserves and retail sales figures for August, as the Rupiah sought support from domestic fiscal conditions.
The interest rate environment also played a role, with higher rates making the Rupiah more attractive to global investors, while the US Dollar's appeal was bolstered by elevated US bond yields and geopolitical uncertainties.
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