Rupiah strengthens as US inflation eases

The rupiah exchange rate strengthened by 21 points, or 0.12 percent, to Rp18,070 per US dollar on Wednesday morning, compared to the previous close of Rp18,091 per US dollar.

Analyst Rully Nova from Bank Woori Saudara stated that the rupiah’s strengthening was influenced by easing US inflation. “The rupiah is strengthening today, moving in the range of Rp18,000 to Rp18,105 per US dollar, influenced by the easing of US inflation and the decline in US government bond yields,” he said.

Citing data from Anadolu, US annual consumer inflation slowed to 3.5 percent in June, below market expectations, from 4.2 percent in May. The slowdown was driven by a sharp drop in energy prices following a ceasefire agreement between the US and Iran. Core inflation, which excludes volatile food and energy prices, remained unchanged on a monthly basis and slowed to 2.6 percent year-on-year from 2.9 percent in May.

Rully added that the decline in US government bond yields was due to fading expectations of a near-term Federal Reserve interest rate hike. Domestically, market participants are awaiting the outcome of Bank Indonesia’s Board of Governors meeting, where the benchmark interest rate is expected to be held at 5.75 percent.