{
  "id": 2308582,
  "title": "Indonesian Rupiah advances despite record Current Account Deficit",
  "url": "https://urgent.news/2026/08/21/indonesian-rupiah-advances-despite-record-current-account-deficit",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-21T05:00:25.000Z",
  "source": {
    "name": "FXStreet",
    "slug": "fxstreet",
    "url": "https://www.fxstreet.com/news/indonesian-rupiah-advances-despite-record-current-account-deficit-202608210500"
  },
  "original_language": "en",
  "account": "Despite a record current account deficit, the Indonesian Rupiah (IDR) has strengthened. In the second quarter of 2026, Indonesia's deficit reached an unprecedented USD 12.49 billion, which is 3.3% of its GDP, up from USD 2.89 billion in the previous year. This increase was mainly due to a significant reduction in the trade surplus, falling to USD 1.32 billion from USD 10.52 billion in the same period last year. The main factor behind this trade deficit was the surge in imports, driven by rising oil prices resulting from the conflict in the Middle East.\n\nNonetheless, the Rupiah's strength is reinforced by Indonesia's strong economic partnership with China. Chinese Vice-Finance Minister Liao Min assured on Friday of additional fiscal policy measures based on emerging economic trends, while maintaining policy continuity and allocating resources over a longer cycle. The Indonesian central bank, Bank Indonesia, also supported currency stability by keeping its key interest rate unchanged at 5.75% for the second consecutive month following the sudden departure of Perry Warjiyo. The bank emphasized that its policy mix would prioritize safeguarding the Rupiah against imported inflation while using liquidity tools to support broader economic growth.\n\nAdditionally, the USD/IDR pair is facing downside pressure due to a weakening US Dollar (USD). The US greenback has weakened alongside low US Treasury yields, as markets respond to Washington's efforts to control elevated yields through a long-end bond buyback program. According to strategists at Scotiabank, the US Treasury's decision to double its bond buybacks is limited and narrowly focused, targeting longer-term rates and limited in scale. The move appears to be a \"liquidity management issue\" rather than a genuine effort to calm Treasury markets after recent term rate hikes.\n\nThe US Dollar (USD) remains the world's most heavily traded currency, accounting for over 88% of global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, as of 2022. The US Dollar has been the world's reserve currency for most of its history, taking over from the British Pound in 1944. The most significant factor impacting the USD's value is monetary policy, which is determined by the Federal Reserve (Fed). The Fed aims to achieve price stability and promote full employment, using interest rates as its primary tool. When inflation is above 2%, the Fed raises rates to reduce the USD value, while lowering interest rates when inflation falls below 2% or unemployment is too high.\n\nIn extreme situations, the Federal Reserve may also print more money and engage in quantitative easing (QE), a non-standard policy measure used when credit is scarce due to banks' fear of counterparty default. QE involves the Fed printing more money and buying US government bonds, leading to a weaker US Dollar. Conversely, quantitative tightening (QT), where the Fed stops buying bonds and does not reinvest maturing principal, usually strengthens the US Dollar.",
  "summary": "USD/IDR extends its losses for the third successive day, trading around 17,760 during the Asian hours on Friday. The currency pair continues to depreciate as the Indonesian Rupiah (IDR) maintains its strength, defying a sharp widening of Indonesia’s current account deficit.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}