Indonesian Rupiah Strengthens Amid Strong Domestic Growth and Softening US Dollar Demand
The Indonesian Rupiah (IDR) continued its upward trend on Wednesday, appreciating against the US Dollar (USD) due to strong domestic economic performance and softening demand for the greenback. The USD/IDR pair depreciated to around 17,970 during Asian hours, as a combination of factors weighed in favor of the IDR.
Indonesia's GDP expanded by 5.29% year-on-year in Q2 2026, surpassing market expectations of 5.1%. This was also a slight moderation from Q1's 5.61% growth, marking the strongest annual expansion since Q3 2022. On a quarterly basis, the economy rebounded sharply with a 3.73% increase, recovering from a 0.77% contraction in Q1 and topping forecasts of 3.5%. This represents the nation's strongest quarterly expansion rate since Q2 2025.
The decline in safe-haven demand for the USD also contributed to the IDR's appreciation, as diplomatic momentum surrounding global energy transit routes grew. According to Axios, the United States, Iran, and Oman are nearing an interim agreement to reopen the Strait of Hormuz, with options for further extension. This development has undermined the greenback's defensive appeal, as safe-haven demand has been tempered.