Jakarta. Rupiah strengthened for a second session on Wednesday, closing at Rp 18,068 per US dollar as softer-than-expected US inflation weighed on the greenback and reinforced expectations that the Federal Reserve will have more room to ease monetary policy.

The Indonesian currency gained 23 points, or 0.13%, to Rp 18,068 per dollar from Tuesday's close of Rp 18,091. Earlier in the day, the rupiah opened 24 points, or 0.13%, stronger at Rp 18,067.

Traze Andalan Futures Director and currency analyst Ibrahim Assuaibi said the rupiah came under pressure after Bank Indonesia reported that the country's external debt rose 2.1% year-on-year to $444.4 billion in May.

"The external debt position was slightly higher than the 2.0% annual growth recorded in April 2026, but it remains well under control despite persistently high global uncertainty," Ibrahim said in a statement on Wednesday.

External sentiment also remained fragile amid escalating tensions in the Middle East after US President Donald Trump reinstated a naval blockade on all Iranian ports.

Iran also said it had again closed the Strait of Hormuz following renewed hostilities with the US last week, further dimming hopes for a lasting ceasefire between the two countries.

Still, the US dollar weakened after June consumer inflation came in below expectations, slowing to 3.5% year-on-year from 4.2%. The softer reading eased concerns over aggressive Federal Reserve rate hikes.

Core US inflation also slowed to 2.6% from 2.9%, below the market expectation of 2.8%, adding to expectations that the Fed may have greater flexibility to lower interest rates.

According to Bloomberg data as of 3:59 p.m. Jakarta time, the rupiah traded at Rp 13,994 against the Singapore dollar, Rp 111.32 against the Japanese yen, Rp 12,625 against the Australian dollar, and Rp 20,646 against the euro.

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