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MUFG flags rupiah pressure as inflation accelerates
MUFG cited August CPI inflation of 3.19% year over year and warned that sustained Brent above $90 could strain Indonesia’s fiscal and external position.
MUFG currency strategist Lloyd Chan remains cautious on the Indonesian rupiah, pointing to accelerating domestic inflation alongside GDP growth still above 5%. In FXStreet’s writeup of the view, the firm said inflation risks remain skewed to the upside as the macro backdrop does not clearly ease pressures on the currency.
The note also highlights trade balance dynamics, saying the trade balance has improved slightly but is still weaker than the 2025 averages. MUFG attributed the gap to higher oil and gas imports, which can add external pressure on Indonesia’s current account and support downside risk for the IDR.
While Bank Indonesia’s policy support and intervention framework may offer near term backing, MUFG warned that persistent strength in global oil prices could worsen longer term pressures. Specifically, it said sustained Brent prices above $90 could weigh on Indonesia’s fiscal and external positions and further pressure the rupiah.
FXStreet attributed the stance to MUFG and added that Indonesia’s August CPI accelerated to 3.19% year over year. The piece framed the combination of inflation acceleration, solid growth, and oil driven import costs as the key drivers behind the cautious outlook for the currency.
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