03.04.202603:06:54UTC+00Rupiah Near 17,000 on Oil Risks, Fiscal Concerns

The Indonesian rupiah hovered near the key IDR 17,000 level on Friday in thin holiday trading, pressured by a broadly stronger U.S. dollar amid ongoing tensions in the Middle East. U.S. President Trump said the war with Iran could last another two to three weeks, although he indicated it was approaching an end. Investor caution also prevailed ahead of the release of March foreign exchange reserves data, following February’s decline to a three-month low. February’s subdued exports, coupled with still-solid imports during the festive period, highlighted persistent external pressures.

Inflation risks have also increased on the back of elevated oil prices, even though annual inflation eased to 3.48% in March, returning to Bank Indonesia’s target range. As a net oil importer, Indonesia remains exposed to prolonged high energy costs, which could widen the fiscal deficit amid spending commitments under President Prabowo’s programs. Authorities are considering measures to contain the impact, while Bank Indonesia has sought to curb rupiah speculation after cutting policy rates by a cumulative 150 basis points since September 2024.