23.02.202606:05:23UTC+00Rupiah Holds Gains as Tariff Uncertainty Caps Dollar

The Indonesian rupiah strengthened for a third straight session on Monday, trading below 16,800 per dollar, as the dollar index eased following the U.S. Supreme Court’s decision to strike down President Trump’s global tariffs. Although Trump swiftly introduced a new 10% tariff, later raised to 15%, the renewed trade policy uncertainty has provided limited support for the greenback.

On the domestic front, Bank Indonesia kept its policy rate unchanged at 4.75% last week for a fifth consecutive meeting, in line with expectations, after delivering a cumulative 150 bps of cuts since September 2024 amid subdued inflation. Policymakers reiterated that the rupiah remains undervalued and reaffirmed their readiness to intervene in the foreign exchange market, supported by ample foreign reserves.

However, the currency’s gains were restrained by expectations of further rate cuts later this year to bolster economic growth. Indonesia’s economy expanded by 5.11% in 2025, slightly below the government’s 5.2% target, while authorities in Jakarta are aiming for 5.4% growth in 2026. Meanwhile, the current account returned to deficit in Q4 2025, adding to external pressures on the rupiah.