Indonesian Rupiah gains momentum as regional strength, safe-haven selloff weaken USD/IDR

USD/IDR extends its losses for the second successive day, trading around 18,060 during European hours on Tuesday. The pair fell as the Indonesian Rupiah (IDR) drew support from broader regional gains and falling crude oil prices, which helped ease the country’s import bill. Bank Indonesia (BI) further stabilized the currency through market intervention, supported by a slight rise in foreign exchange reserves for October.

Indonesia growth outperforms as Q3 GDP tops expectations

Analysts at MUFG/BTMU note that Indonesia’s latest activity data surprised positively, with “Indonesia’s Q3 GDP growth surprised to the upside, accelerating to 5.47%yoy from 5.29% in Q2, beating the 5.2% consensus.” They highlight that the stronger outturn underscores resilient domestic demand and export performance, reinforcing the view that underlying growth momentum remains solid even as broader investor confidence and portfolio flows remain more fragile.

Meanwhile, the US Dollar (USD) faced downward pressure as safe-haven demand waned following growing speculation over a diplomatic breakthrough between Washington and Tehran. US President Donald Trump reinforced this shift by stating that further military strikes against Iran appeared unnecessary, describing the conflict as "militarily, effectively over" while maintaining that US forces remain "locked and loaded" to support regional stability. Meanwhile, crude oil prices falling to their lowest levels since August continued to ease global inflationary concerns.

Despite the Dollar's broader softness, downside potential for the greenback was cushioned by hawkish signals from the Federal Reserve. Strong Nonfarm Payrolls data alongside firm comments from Richmond Fed President Thomas Barkin and Chicago Fed President Austan Goolsbee reinforced expectations of tighter monetary policy. Consequently, market pricing via the CME FedWatch Tool showed the probability of a December Fed rate hike rising to 84%, up from 76% the previous day.