FX.co ★ Rupiah Firms Despite Fiscal Risks and Easing Bets

The Indonesian rupiah strengthened to below IDR 16,800 per dollar on Wednesday, rebounding from a muted previous session as the dollar index eased after U.S. President Trump signaled no change in tariff policy during his State of the Union address. Domestically, Bank Indonesia reiterated its commitment to supporting currency stability, vowing to provide liquidity and conduct market interventions backed by substantial foreign exchange reserves. Earlier this month, the central bank kept its policy rate unchanged at 4.75% for a fifth consecutive meeting, after delivering a total of 150 basis points in rate cuts since September 2024 amid subdued inflation. Even so, the rupiah has hovered near record lows since President Prabowo appointed his nephew as deputy governor in early February, a move that has heightened governance concerns. Expectations of further monetary easing, weak demand at a recent government bond auction, and market skepticism over the USD 20 billion free-meals program have further fueled fiscal anxieties. Traders also remain cautious ahead of key releases next week, including February inflation data and January trade figures.