The Indonesian rupiah remained surprisingly resilient even after Bank Indonesia reported a record current account deficit of $9.8 billion, equivalent to 2.8% of GDP, for the fourth quarter of 2024. The deficit was driven largely by higher imports of raw materials and capital goods linked to strong domestic demand and infrastructure spending.
OCBC currency analysts said the currency's stability was mainly a function of the softer US dollar rather than a fundamental improvement in Indonesia's external position. The USD/IDR pair was trading around the 15,800-16,000 range, and the bank warned that the relief could be limited unless trade data, capital flows and the pace of Federal Reserve rate cuts improve more sustainably.
Market pricing for a potential Federal Reserve pause or easing cycle has pulled the dollar index back from recent highs, supporting emerging market currencies including the rupiah. Rising commodity prices also boosted sentiment toward Indonesian assets. Bank Indonesia has been intervening in foreign exchange markets to smooth volatility, while holding back from aggressive rate cuts to avoid additional currency weakness.
Still, economists cautioned that a sustained current account deficit could leave the rupiah exposed to sudden capital outflows if global liquidity conditions tighten. Investors are likely to monitor upcoming Indonesian trade and inflation data, as well as signals from the Federal Reserve, for the next directional cue.
