Indonesian Rupiah declines as Retail Sales face downturn in April
USD/IDR extends gains for the second consecutive day, trading around 17,970 during the Asian hours on Thursday. The pair holds ground as the Indonesian Rupiah (IDR) struggles following the domestic Retail Sales data release.
Indonesia’s retail sector faced a sharp downturn in April, with sales contracting by 3.7% year-over-year. This drop marks a significant reversal from the 3.4% growth recorded in March and represents the first annual decline for the sector since April 2025. On a monthly basis, Retail Sales plummeted by 11.6%, wiping out March’s 10.3% gain and registering the steepest month-over-month decline since June 2022. This sudden pullback highlights a notable cooling in household consumption, as rising non-subsidized fuel prices continue to squeeze consumer purchasing power.
The USD/IDR pair has found strong support as intensifying geopolitical friction drives global demand toward safe-haven assets. In the Middle East, the Israel Defense Forces' Home Front Command issued early civilian defense warnings following rocket launches from Lebanon into northern Israel. Tensions escalated further as US Central Command confirmed the launch of airstrikes in Iran. Adding to the friction, US President Donald Trump warned of severe military consequences if an interim peace agreement is not finalized, accusing Tehran of intentionally stalling negotiations—a claim Iranian officials firmly deny.
The US Dollar (USD) received an additional boost from a hot inflation report, which effectively solidified expectations for a "higher-for-longer" interest rate environment from the Federal Reserve. Driven primarily by war-induced energy price spikes, US inflation accelerated in May to its fastest pace in over three years. The Consumer Price Index rose 4.2% year-over-year and 0.5% monthly, both perfectly matching market forecasts. Meanwhile, core CPI, which strips out volatile food and energy costs, climbed 0.2% on the month and 2.9% annually. Following the data release, financial markets aggressively pivoted, abandoning any remaining expectations for Fed rate cuts this year.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Federal Reserve meeting minutes: All 19 policymakers support a rate hike in September, but reasons vary; most expect further hikes this year, suggesting no urgency in October.
Most officials view a September interest rate hike as an "insurance" measure against stubborn inflation; a minority see it as a necessary step to curb inflation. Overall, there is no indication of a desire to push for consecutive rate hikes. The "New Fed News Agency" emphasized the minutes: "Most participants believe that it may be appropriate to raise interest rates again before the end of the year." Nearly all officials believe inflation remains elevated and the labor market is close to full employment. Many noted that, despite the rise in long-term U.S. Treasury yields, financial conditions are still conducive to economic growth. Some officials believe that AI will boost investment and productivity, but may also contribute to inflation. The minutes revealed that the U.S.-Japan joint intervention in July to support the yen was a U.S. Treasury action, with no Federal Reserve funds used.
Solana Consolidates After Sharp Expansion
FLOKI Recovery Tests Key Resistance
100 Million Barrels Shrinkage? Reports Say EU Believes Oil Reserve Release Plan Mainly Fulfills Previous Commitments, Not New Quotas
Last Friday, G7 member countries agreed to release up to 100 million barrels of crude oil and diesel reserves. The IEA had announced a plan to release 400 million barrels in March, and as of last Friday, about 75 million barrels had yet to be released. Most EU member states believe that this action is simply fulfilling previous commitments rather than adding new releases. Regarding the earlier-than-scheduled release of diesel stocks emphasized in last week's G7 agreement, EU member states consider it feasible, but on a limited scale.
Crypto prices
More
