Rupiah Recovery Faces External Tests Amid US Inflation Concerns

The Indonesian Rupiah's recent recovery may be put to the test by upcoming US inflation data, warns Lloyd Chan from MUFG.

Firmer US inflation could reinforce elevated US yields and challenge the USD/IDR exchange rate's break below 17,700.

Domestically, while buffers remain supportive, there are limits to their effectiveness, particularly with foreign ownership of SRBI nearing 27% - close to previous highs seen in late 2024.

Rising oil prices also pose a risk, as higher Brent prices above US$82/bbl begin to erode the cushioning effect from coal, palm oil, and base-metal exports.