Indonesian Rupiah steady as US Dollar gains on geopolitical tensions

The Indonesian Rupiah (IDR) is holding steady against the US Dollar (USD), despite the Greenback gaining strength due to rising safe-haven demand. The USD/IDR pair is currently trading around 17,930, with potential for further appreciation as global geopolitical tensions escalate. The Houthi group's missile and drone strikes on Saudi Arabian targets have spurred investors to seek refuge in traditional safe-haven assets like the US Dollar.

Adding to the Dollar's momentum are higher US Treasury yields, which have hit 24-year highs. This surge is driven by a global bond selloff, fueled by expanding fiscal deficits and persistent inflationary pressures. The latest ISM data also highlighted increasing input costs in the US services sector, reinforcing inflation concerns.

Despite the USD's strength, the Indonesian Rupiah may find support from domestic fiscal conditions. Revenue growth through August has strengthened Indonesia's fiscal position, although tax-restitution delays have been reported. Traders are awaiting key economic releases, including September foreign exchange reserves and August retail sales figures, for further clarity.

Francesco Pesole of ING noted that the Dollar's support persists due to the Euro's weakness and rising global bond yields. He acknowledged that strong equity performance has capped USD gains but emphasized that the domestic backdrop remains favorable for the Greenback, keeping it underpinned even as risk assets rally.