Rupiah strengthens as US PPI data comes in lower than expected

Jakarta (ANTARA) - The rupiah exchange rate against the US dollar at the opening of trading on Friday moved stronger by 4 points, or 0.02 percent, to Rp17,873 per US dollar compared with the previous close of Rp17,877 per US dollar.

Permata Bank Chief Economist Josua Pardede said rupiah sentiment was influenced by the release of US Producer Price Index (PPI) data that came in lower than expected.

“On a monthly basis, PPI increased to 0.0 percent month-on-month (MoM) from -0.1 percent MoM, but was below the consensus of 0.2 percent MoM,” he told ANTARA in Jakarta on Friday.

On an annual basis, PPI slowed to 4.7 percent year-on-year (yoy) from 5.5 percent yoy, also lower than the expectation of 4.9 percent yoy.

The lower-than-expected PPI data indicates that inflationary pressure stemming from energy continues to ease, thereby lowering expectations of an interest rate hike at the next Federal Open Market Committee (FOMC) meeting.

“Based on FedWatch, the probability of an interest rate hike in September 2026 has fallen to 34.8 percent,” Josua said.

On the domestic front, investors are focusing on the speech by Indonesian President Prabowo Subianto and the announcement of the 2027 State Budget Draft (RAPBN).

Based on these factors, the rupiah is expected to move within the range of Rp17,825 to Rp17,950 per US dollar.