Asian Currencies Rally This Week, But Rupiah Slumps
The Rupiah managed to strengthen against the US Dollar in the final trading session of July. However, this late gain was insufficient to offset the depreciation experienced throughout the week and the month. According to Refinitiv, the Rupiah closed up 0.47% at Rp17,990/US$ on Friday (31/07/2026).
Despite the sharp recovery in the final session, the Rupiah weakened by 0.31% over the week, marking the worst performance among Asian currencies. This pressure was particularly notable as the US Dollar Index fell by 1.53% during the same period to 99.914. Looking at the broader monthly view, the Rupiah depreciated by 0.64% throughout July. The currency briefly breached the Rp18,000/US$ level following the resignation of Bank Indonesia Governor Perry Warjiyo, which sparked concerns regarding leadership transition and central bank independence. Perry announced his resignation on Monday (27/07/2026) for personal reasons, with Senior Deputy Governor Destry Damayanti appointed as acting Governor.
Furthermore, the Rupiah’s weakness coincided with a surge in global oil prices. Throughout July, Brent crude jumped by 23.59%, while West Texas Intermediate (WTI) soared by 21.83%. As an oil importer, Indonesia faces increased demand for US Dollars as energy costs rise.
The Rupiah’s movement stood in stark contrast to its regional peers; out of ten currencies, nine strengthened while only the Rupiah ended in the red. The Japanese Yen saw the largest gain, surging 3.83% to JPY157.57 per US Dollar. This rally was primarily driven by Japanese government intervention, involving the purchase of Yen and the sale of Dollars on Thursday (30/07/2026). Bank of Japan data suggests the intervention value could reach US$58.97 billion. The Yen’s strength was further supported by the Federal Reserve Bank of New York purchasing Yen on behalf of the US Treasury, marking the first such US intervention to support the Yen since 2011.
South Korea’s Won also strengthened by 1.17%, following reports of dollar sales by South Korean authorities. Other regional gains were recorded by the Thai Baht (0.80%), Philippine Peso (0.74%), Singapore Dollar (0.64%), Chinese Yuan (0.31%), Vietnamese Dong (0.13%), Malaysian Ringgit (0.12%), and Taiwan Dollar (0.08%).
The broad-based Asian rally followed the weakening of the US Dollar, which retreated after the Federal Reserve maintained interest rates within the 3.50%-375% range during its July 28-29, 2026 meeting. While the decision was accompanied by signals of tighter policy, the lack of clear guidance on the timing of future hikes led markets to reduce bets on a September rate increase. The Dollar faced further pressure after US Personal Consumption Expenditures (PCE) price index fell by 0.1% month-on-month in June, suggesting lower inflation and reducing the immediate pressure on the Federal Reserve to hike rates.