Oil Price Surge Tests Indonesia's Rupiah Resilience

Higher oil prices are putting pressure on Indonesia's rupiah currency, MUFG analyst Lloyd Chan says. Despite recent GDP growth exceeding 5%, domestic inflation accelerated to 3.19% year-over-year in August, posing an upside risk.

The trade balance has improved slightly, returning to a modest surplus of $0.12 billion in July after two months of deficits. However, the trade balance remains below 2025 averages due to higher oil and gas imports.

Bank Indonesia's policy support and intervention framework are expected to provide near-term backing for the rupiah, but sustained Brent prices above $90 per barrel could put increasing pressure on both Indonesia's fiscal and external balances.