Rupiah Strengthens as Consumer Confidence Remains Optimistic

Jakarta (ANTARA) - The rupiah exchange rate against the US dollar at the close of trading on Monday strengthened by 142 points, or 0.79 percent, to Rp17,755 per US dollar, compared with the previous close of Rp17,897 per US dollar.

Money market analyst Ibrahim Assuaibi said the rupiah’s strengthening was influenced by the Consumer Confidence Index (IKK), which remains at an optimistic level.

“Consumers in general remain optimistic about economic conditions, even though their level of confidence has continued to decline over the past three months,” he said in a written statement in Jakarta on Monday.

Bank Indonesia (BI) reported that the IKK for July 2026 fell to 116.8 from 117.8 in June 2026. The decline was the third in a row.

This trend is seen as indicating that consumers are becoming more cautious in assessing economic conditions and making spending decisions.

Nevertheless, the IKK level remains above 100, which means consumers in general are still optimistic about economic conditions.

If the downward trend continues, Ibrahim said, room for consumption growth could come under pressure as households tend to hold back spending and become more selective in allocating income.

“Thus, the development of the IKK in the coming months will be important to see how strong domestic consumption resilience is amid various economic challenges,” he said.

In addition, another sentiment came from a report that Indonesian President Prabowo Subianto has officially nominated Destry Damayanti as the sole candidate for definitive BI Governor to the House of Representatives (DPR). The nomination is set out in a Presidential Letter (Surpres) that has been submitted to the DPR leadership to fill the position of central bank head.

Looking at global sentiment, he continued, hopes have emerged that Iran and Oman will soon reach an agreement leading to the reopening of the Strait of Hormuz.

Although Iran stated on Sunday (9/8) that the agreement with Oman is already in its final stages, the country reiterated that the shipping lane will only be reopened after Washington fulfils other conditions, including the provision of compensation from the US to Iran for the extensive attacks that have occurred.

In addition, easing concerns over US inflation have prompted market participants to reduce expectations of a potential Federal Reserve (Fed) interest rate hike.

“Moreover, together with weak employment figures, this further reduces expectations that the Fed will raise interest rates in the coming months,” Ibrahim said.

According to the CME FedWatch Tool, the market currently sees around a 42 percent probability of a rate hike at the September meeting, down from around 67 percent a week ago.

Over the coming week, the market is said to be watching the release of the US Consumer Price Index (CPI) for July on Wednesday (12/8). Economists expect inflation to ease slightly from 3.5 percent to 3.4 percent year-on-year, with Core CPI also falling from 2.6 percent to 2.5 percent year-on-year.

Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also strengthened today to Rp17,795 per US dollar from Rp17,913 per US dollar previously.