Rupiah Rallies on Dollar Weakness, Reserve Boost

The Indonesian rupiah gained strength against the US dollar on Tuesday, reversing earlier losses as a broad decline in the dollar's value supported the currency.

The rupiah was trading below IDR 17,650 per US dollar after Finance Minister Purbaya Yudhi Sadewa expressed confidence that GDP growth would remain solid in Q3 and Q4, despite recent natural disasters, with no significant risks to the state budget.

The currency's gain was also boosted by stronger external buffers, as August forex reserves reached a five-month high.

However, upside was constrained by inflation concerns, with annual inflation of 3.19% in August prompting Bank Indonesia and the government to step up joint market interventions to control volatile food prices.