Investor unease over Indonesia’s legal immunity for state fund bond buyers weakens the Rupiah, lifting USD/IDR to near 17,940.
The USD/IDR pair climbed to 17,940 during Asian trading on Tuesday, extending gains for a second day. The Rupiah’s decline stems from governance concerns after Indonesia’s government granted legal immunity to buyers of bonds issued by state investment fund Danantara, rattling investor confidence.
May inflation hit 3.08%, approaching Bank Indonesia’s 3.5% target ceiling due to rising food and energy costs. Traders await Wednesday’s Manufacturing PMI, trade balance, and June inflation data for further direction. The US Dollar’s strength, fueled by a 60% chance of a Fed rate hike by September, also supports the pair.
Markets are focused on upcoming US labor data, including Thursday’s Nonfarm Payrolls, expected at 114,000 jobs with unemployment steady at 4.3%. Geopolitical tensions add to safe-haven demand for the Greenback.