Indonesian Rupiah inches higher as annual inflation rises in June

USD/IDR edges lower as Indonesia’s annual inflation accelerated to 3.34%, beating forecasts and nearing the top of the central bank's target range.
Indonesia’s manufacturing PMI plummeted to 46.9 in June, marking a 12-month low and the sector's second contraction this year.
The US Dollar gains on safe-haven demand amid rising uncertainty surrounding the US-Iran Doha negotiations.

Akhtar Faruqui FXStreet

USD/IDR pares its daily gains, remaining in positive territory for the third successive day and trading around 17,980 during the Asian hours on Wednesday. The pair inches lower as the Indonesian Rupiah (IDR) receives minor support following the economic data release.

Indonesia’s annual inflation rate accelerated to 3.34% in June, up from 3.08% the previous month. This hotter-than-expected reading beat the Reuters poll consensus of 3.20% and moved closer to the ceiling of Bank Indonesia’s 1.5% to 3.5% target range.

The upward pressure was evident across multiple metrics, with core inflation rising to 2.76%, surpassing both the prior 2.59% and the forecasted 2.6%. On a monthly basis, inflation jumped 0.44%, outpacing the anticipated 0.3% and the previous month's 0.28%.

The manufacturing sector took a significant hit. The S&P Global Manufacturing PMI plummeted to 46.9 in June from a neutral 50.0 in May, marking its lowest level since June 2025 and signaling the sector's second contraction of the year.

The USD/IDR pair appreciates as the US Dollar (USD) gains ground on safe-haven demand amid uncertainty over United States (US)-Iran Doha talks. US negotiators Jared Kushner and Steve Witkoff arrived in Qatar on Tuesday to meet with mediators regarding the implementation of an initial peace deal to end the conflict with Iran. However, Tehran stated it would not meet directly with the US envoys, clouding prospects for a lasting resolution and keeping geopolitical risk premiums alive in the market.

Traders are focusing on Federal Reserve (Fed) Chairman Kevin Warsh's upcoming appearance at the European Central Bank (ECB) Forum in Sintra. Market momentum should pick up during Wednesday's US session with the release of the Automatic Data Processing (ADP) report on private-sector employment and the Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI). Following these events, attention will shift to Thursday's crucial Nonfarm Payrolls (NFP) monthly jobs data.

Economic Indicator

Inflation (YoY)

The Inflation index released by the Statistics Indonesia is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of Indonesian Rupiah is dragged down by inflation. The CPI is used as a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the Rupiah, while a low reading is seen as negative (or Bearish).

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Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The European Central Bank Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Federal Reserve, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.