Indonesian Rupiah remains under pressure as domestic growth slows
USD/IDR remains stronger for the third consecutive day, trading around 18,200 during European hours on Wednesday. The currency pair is moving higher as the Indonesian Rupiah (IDR) struggles under the weight of mounting domestic concerns.
The Indonesian Rupiah (IDR) continues to face pressure as domestic growth slows. The USD/IDR currency pair has been on the rise for three consecutive days, trading around 18,200 during European hours on Wednesday. Finance Minister Suahasil Nazara has lowered the nation's 2026 growth projection to 5.4%-5.5%, down from the previously expected 5.6%-6%, indicating further slowdown from the 5.29% year-on-year growth in Q2.
This downward adjustment, along with rising oil prices, increased import volumes, and volatile export revenues, has contributed to the pressure on the IDR. Bank Indonesia (BI) maintains that its currency interventions have been effective, with Governor Destry reiterating the central bank's commitment to an active market presence through Non-Deliverable Forwards (NDFs).
However, gains in the USD/IDR pair remain constrained by global weakness in the US Dollar following the midterm elections, which saw Democrats win control of the House of Representatives from the Republicans. This shift in congressional leadership has prompted market participants to anticipate potential changes in US fiscal policy.
Traders are also closely monitoring geopolitical developments and interest rate expectations, particularly the potential resumption of US military strikes against Iran amidst ongoing diplomatic talks. While softer energy prices may ease expectations for prolonged monetary tightening, the Federal Reserve is still expected to raise rates in December, as indicated by the CME FedWatch Tool.
The IDR is highly sensitive to a combination of global market conditions, domestic economic fundamentals, commodity price fluctuations, and central bank interventions. As an emerging market currency, the Rupiah's trajectory depends on both domestic resilience and international economic momentum. Bank Indonesia plays a crucial role in stabilizing the Rupiah through strategic monetary policy and direct market operations, including adjusting benchmark interest rates, using a triple-intervention framework, and employing monetary instruments like Sekuritas Rupiah Bank Indonesia (SRBI) to manage currency volatility and attract foreign portfolio investments.
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