FX.co ★ Rupiah Set for Third Weekly Loss on Domestic Headwinds

The Indonesian rupiah traded around IDR 18,050 per US dollar on Friday, remaining under pressure as weak domestic fundamentals outweighed support from a softer greenback. The dollar index extended recent losses after reports that the US and Iran would continue peace negotiations, reducing safe-haven demand.

Domestically, sentiment stayed fragile. May retail sales recorded the steepest year-on-year decline in three years, as higher non-subsidized fuel prices curbed household spending. At the same time, consumer confidence dropped for a third consecutive month in June, reflecting growing concerns about income, employment prospects, and future consumption.

For the week, the rupiah was on track for a third straight loss, down about 0.7% so far, amid mounting fears that Indonesia could be downgraded to frontier-market status next year. Even so, the currency’s slide was partly contained by stabilizing oil prices, a modest increase in foreign-exchange reserves, and government efforts to strengthen food supplies and prepare for El Niño, which helped ease worries about food inflation.