Rupiah Rises as Cooling Geopolitical Risks, Stronger PMI Boost Confidence
Jakarta. Rupiah extended its gains on Monday, strengthening past the Rp 18,000-per-dollar mark as easing tensions in the Middle East pushed oil prices lower, while stronger domestic manufacturing data and July's monthly deflation added support to the Indonesian currency.
The rupiah closed up 25 points, or 0.14%, at Rp 17,997 per US dollar, strengthening from Friday's close of Rp 18,022.
The currency advanced after global oil prices retreated as geopolitical tensions eased. US President Donald Trump said he had canceled plans for a large-scale military strike on Iran after Tehran and several Middle Eastern countries requested more time for negotiations.
Traze Andalan Futures Director and currency analyst Ibrahim Assuaibi said investors are now shifting their focus to the US Federal Reserve's policy outlook and a series of key labor market data due this week.
"Although markets posted gains on Monday, investors remained cautious after three Federal Reserve officials who dissented at last week's policy meeting reiterated on Friday that inflation remains too high," Ibrahim said in a statement.
He said markets are closely watching this week's US labor market releases, including JOLTS job openings, the ADP private payrolls report, weekly jobless claims, and the nonfarm payrolls report, for further clues on the Fed's next policy move.
Domestically, the rupiah also drew support after Indonesia's manufacturing sector returned to expansion in July following a contraction in the previous month.
The S&P Global Indonesia Manufacturing Purchasing Managers' Index (PMI) rose to 50.2 in July from 46.9 in June, signaling renewed growth in factory activity.
Indonesia also recorded 0.14% month-on-month deflation in July after posting 0.44% inflation in June. Annual inflation stood at 2.88% in July, according to Statistics Indonesia (BPS).
Other regional currencies were quoted at Rp 14,028 per Singapore dollar, Rp 114.66 per Japanese yen, Rp 12,615 per Australian dollar, and Rp 20,733 per euro.
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