The currency recovered after nearing IDR 18,050, helped by easing oil prices and stronger-than-expected Q2 GDP, though Bank Indonesia leadership uncertainty and June external balance worries capped gains.
Indonesia's rupiah strengthened to about IDR 17,930 per U.S. dollar on Wednesday afternoon, rebounding after briefly weakening to nearly IDR 18,050 in the previous session. The move was supported by a softer U.S. dollar as reports of a possible interim U.S.–Iran deal to reopen the Strait of Hormuz pushed oil prices lower, reducing inflation risks and tempering expectations for additional global rate hikes. Domestic sentiment also improved after Indonesia reported Q2 GDP growth of 5.29% year on year, above forecasts even though it slowed from Q1. On a quarterly basis, the economy expanded 3.73%, the fastest pace in a year, after a 0.77% contraction in Q1. Inflation cooled to 2.88% in July, a three-month low and still within Bank Indonesia's target range. Still, the rupiah's advance was limited by concerns over external balances after a persistent trade gap in June linked to a jump in crude imports, while traders remained cautious over leadership uncertainty at Bank Indonesia following Perry Warjiyo's abrupt exit and awaited President Prabowo's pick for the next governor.