Key Moments
- USD/IDR touched an all-time high of 18,210 and was last trading near 18,200, extending gains for a fifth straight session.
- Bank Indonesia’s foreign exchange reserves fell by $1.3 billion in May to $144.9 billion, the lowest level in nearly two years and equal to 5.6 months of imports.
- Stronger US labor market data and renewed geopolitical tensions in the Middle East supported the US Dollar, adding to pressure on the Rupiah.
Rupiah Slides to Record Low Against the Dollar
USD/IDR continued its upward trajectory for a fifth consecutive day, trading around 18,200 after hitting a new all-time intraday peak of 18,210 during Asian trading on Monday. The Indonesian Rupiah (IDR) weakened notably as investors focused on mounting domestic concerns, including rising fiscal risks, changes in commodity export regulations, and doubts about Bank Indonesia’s (BI) operational independence.
These internal pressures significantly accelerated the Rupiah’s decline, prompting BI to intervene forcefully in the currency market in an effort to stem the sell-off and stabilize conditions.
Bank Indonesia’s FX Reserves Fall for Fifth Month
Data released by Bank Indonesia on Monday showed the scale of those interventions. The central bank’s foreign exchange reserves fell by $1.3 billion in May, bringing the total down to $144.9 billion. This was the fifth monthly drop in a row and pushed reserves to their lowest point in almost two years.
According to the data, the current reserve level is equivalent to 5.6 months of imports, underscoring the significant cost of defending the Rupiah in the face of sustained selling pressure.
| Indicator | Latest Value | Comment |
|---|---|---|
| USD/IDR intraday high | 18,210 | All-time high during Asian hours on Monday |
| USD/IDR recent level | Around 18,200 | Fifth straight day of gains |
| FX reserves (May) | $144.9 billion | Down $1.3 billion; lowest in nearly two years |
| Import cover | 5.6 months | Based on latest reserves figure |
Middle East Tensions Bolster Safe-Haven Demand
The broader backdrop for the Rupiah’s weakness included a firmer US Dollar (USD). The Greenback drew additional support from safe-haven flows after the Israeli military reported that a missile had been launched from Yemen toward Israeli territory and was intercepted by its air defense systems.
The Guardian reported that air raid sirens sounded in Tel Aviv, following the attack from Yemen. The retaliatory attacks from Yemen, whose military force, the Houthis, is backed by Iran, reflect that conflicts in the Middle East have started again.
Resilient US Labor Data Supports Expectations for Higher Fed Rates
The US Dollar also found support from recent economic data. Stronger-than-anticipated US employment figures reinforced market expectations that the Federal Reserve (Fed) could raise interest rates later this year.
US Nonfarm Payrolls (NFP) increased by 172,000 jobs in May, compared to 179,000 (revised from 115,000) in the previous reading, while the Unemployment Rate remained at 4.3% over the same period. The combination of continued job gains and a steady jobless rate added to the case for tighter US monetary policy, which in turn contributed to upward pressure on USD/IDR.
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