Rupiah Strengthens as Indonesia's Foreign Exchange Reserves Remain Robust
The rupiah strengthened against the US dollar at the close of trading on Monday, gaining 87 points or 0.49 percent to reach Rp17,810 per US dollar, compared to the previous close of Rp17,897 per US dollar.
Research and Development analyst at the Indonesia Commodity & Derivatives Exchange (ICDX) Muhammad Amru Syifa stated that the rupiah’s appreciation was supported by Indonesia’s relatively strong foreign exchange reserves.
“The rupiah is still receiving support from the relatively strong condition of the foreign exchange reserves,” he said in Jakarta on Monday.
Indonesia’s foreign exchange reserves stood at USD 145.3 billion at the end of July 2026, a slight decrease from USD 145.6 billion the previous month. The high level of reserves is considered to provide Bank Indonesia (BI) with sufficient room to maintain exchange rate stability through intervention in the foreign exchange market.
However, he noted that the decline in reserves also indicates that pressure on the rupiah still needs to be monitored.
From a global perspective, the rupiah received positive sentiment as the US dollar index stood at 99.6, its lowest since early June, following weaker US labour market data that raised expectations of monetary policy easing.
In the short term, the market will focus on US inflation data, which is an important indicator in shaping expectations for the Federal Reserve’s policy at its September 2026 meeting.
“Lower-than-expected inflation could pressure the US dollar and provide room for the rupiah to strengthen. Conversely, higher inflation could revive expectations of tighter monetary policy and push the US dollar higher,” Amru explained.
In the short term, the rupiah is expected to have the opportunity to strengthen within a limited range of Rp17,750 to Rp17,900 per US dollar. If US inflation comes in lower than market expectations, expectations of Fed policy easing could increase, thereby pressuring the US dollar and providing room for the rupiah to appreciate.