Key Moments
- USD/IDR advanced for a third straight session, trading near 17,950 during Asian trading on Friday as risk aversion supported the US Dollar.
- Bank Indonesia’s off-cycle 25 basis point rate hike to 5.50% and higher bond yields have triggered a notable pickup in foreign capital inflows.
- A June 10 SRBI auction raised 15 trillion Rupiah ($834.49 million), with strong foreign demand for up-to-one-year tenors, underscoring renewed confidence in Indonesian assets.
Middle East Flare-Up Fuels Safe-Haven Flows
USD/IDR extended its upward move for the third consecutive trading day, hovering around 17,950 in Asian hours on Friday. The pair climbed as renewed geopolitical tensions in the Middle East reinforced demand for the US Dollar (USD) as a safe-haven asset, paring back recent optimism around diplomatic progress.
According to Fox News, US forces intercepted and destroyed two Iranian one-way attack drones near the strategically important Strait of Hormuz after they attempted to engage commercial shipping. In contrast, Iranian state media linked reported explosions in Sirik to an encounter with a vessel accused of violating rules in the waterway. They stated that the Islamic Revolutionary Guard Corps (IRGC) had issued a warning to an oil tanker, compelling it to observe a regional traffic ban.
Earlier, US President Donald Trump indicated that a broad peace accord with Iran could be completed as soon as this weekend, following his recent decision to suspend planned military action against Iran’s energy assets. While the formal agreement still awaited bilateral ratification, Iran’s semi-official Fars news agency reported that Tehran was likely to endorse the proposal. President Trump said the agreement is designed to ensure the secure reopening of shipping lanes in the Strait of Hormuz and to obtain binding assurances from Iran to relinquish its nuclear weapons program.
Bank Indonesia’s Off-Cycle Hike Aims to Anchor the Rupiah
Bank Indonesia (BI) moved unexpectedly on Tuesday with an off-cycle policy adjustment, lifting its benchmark interest rate by 25 basis points to 5.50%. The measure was targeted at stabilizing the Indonesian Rupiah (IDR) after the currency had fallen to a sequence of all-time lows.
On Friday, BI spokesperson Ramdan Denny Prakoso highlighted that foreign investors reacted favorably to the rate increase and the associated rise in domestic bond yields, driving a meaningful uptick in foreign capital inflows during the week. This influx has the potential to cushion the Rupiah and, in turn, cap additional upside in the USD/IDR pair.
Robust Demand at SRBI Auction Signals Improved Sentiment
Renewed confidence in Indonesian assets was evident in the June 10 auction of Bank Indonesia bonds (SRBI). The sale garnered 15 trillion Rupiah ($834.49 million), with demand heavily concentrated in bonds with maturities of up to one year and largely fueled by foreign investors.
Prakoso noted that overseas investors have also started to re-engage with the wider government bond market, particularly in short- and medium-term segments. He added that BI will prioritize maintaining the appeal of domestic financial instruments to support a steady stream of foreign inflows.
In addition to the policy rate move, the central bank reiterated its dedication to Rupiah stability, signaling continued, calibrated operations across offshore, onshore, and spot Non-Deliverable Forward (NDF) markets.
US Dollar Performance Against Major Currencies
The following table presents percentage changes for the US Dollar (USD) versus key currencies over the last 7 days. Over this period, the US Dollar showed its strongest performance against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | IDR | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.34% | 0.08% | 0.16% | 0.46% | 1.36% | 0.78% | 0.00% | |
| EUR | -0.34% | -0.26% | -0.22% | 0.13% | 1.01% | 0.44% | 0.00% | |
| GBP | -0.08% | 0.26% | 0.04% | 0.40% | 1.22% | 0.74% | -2.38% | |
| JPY | -0.16% | 0.22% | -0.04% | 0.40% | 1.31% | 0.68% | -0.75% | |
| CAD | -0.46% | -0.13% | -0.40% | -0.40% | 0.94% | 0.29% | -1.28% | |
| AUD | -1.36% | -1.01% | -1.22% | -1.31% | -0.94% | -0.56% | -1.27% | |
| NZD | -0.78% | -0.44% | -0.74% | -0.68% | -0.29% | 0.56% | -1.04% | |
| IDR | 0.00% | 0.00% | 2.38% | 0.75% | 1.28% | 1.27% | 1.04% |
The heat map reflects cross-currency percentage moves, with the base currency shown in the left-hand column and the quote currency in the top row. For instance, selecting the US Dollar as the base and moving horizontally to the Japanese Yen cell provides the percentage change for USD (base)/JPY (quote).
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