The Indonesian rupiah strengthened below IDR 17,600 per U.S. dollar on Wednesday, extending recent gains as optimism over the country’s external position supported the currency. Foreign-exchange reserves rose to a five-month high in August, helped by government withdrawals of external loans, reinforcing expectations that Indonesia’s external buffers will remain ample in the coming months. Domestic conditions also improved, with consumer sentiment reaching a three-month high in August as households reported stronger finances and a brighter economic outlook. Bank Indonesia and the government intensified market interventions to contain food-price volatility after annual inflation accelerated to 3.19% in August. The rupiah’s advance was constrained by concern that oil prices near USD 100 a barrel could strain the state budget. Traders also awaited July retail-sales data after sales declined for a third consecutive month in June. Globally, the dollar index steadied following recent losses as higher oil prices revived inflation concerns and reduced expectations for aggressive Federal Reserve easing. Earlier support for the rupiah had also come from yen gains, carry-trade unwinding and Finance Minister Purbaya Yudhi Sadewa’s assessment that growth would remain solid in the third and fourth quarters despite recent natural disasters, with no significant state-budget risks.