Rupiah strengthens as US NFP data comes in weaker than expected

Jakarta (ANTARA) - Permata Bank Chief Economist Josua Pardede believes the strengthening of the rupiah is being influenced by the release of US labour market data, which was weaker than expectations.

“Non-Farm Payrolls (NUP) additions only reached 57,000 in June 2026, down from 129,000 in the previous month and far below the market consensus of 113,000,” he told ANTARA in Jakarta on Friday.

The rupiah exchange rate moved up by 45 points or 0.25 per cent to Rp17,950 per US dollar on Friday morning, compared to the previous close of Rp17,995 per US dollar.

Meanwhile, the unemployment rate fell slightly to 4.2 per cent from 4.3 per cent, performing better than the market expectation of 4.3 per cent.

Market participants are said to be focusing more on the weak NFP data, which has pushed back expectations for a Federal Reserve interest rate hike from September 2026 to October 2026.

On the other hand, he noted that there are investor concerns regarding the resilience of Indonesia’s external sector, following the recording of the first monthly trade deficit in six years.

Negative sentiment is further reinforced by a Fitch projection, which estimates that Indonesia’s foreign exchange reserves will fall to the equivalent of 4.9 months of external payments by the end of 2026, lower than the median for BBB-rated countries at 5.0 months of external payments.

“These developments increase concerns regarding the potential widening of the current account deficit and weigh on investor sentiment towards the rupiah,” said Josua.