Please find enclosed the latest edition of our PERSPECTIVES Viewpoint – designed to provide regular, up-to-date analysis of key trends in all the major asset classes.
The INR and IDR have both faced similar global pressures, but differences in domestic conditions have led to contrasting currency dynamics. In this Viewpoint FX we examine how policy responses and underlying fundamentals shape India’s relatively measured adjustment versus Indonesia’s comparatively tighter policy constraints.
Key takeaways:
- Both the Indian rupee (INR) and Indonesian rupiah (IDR) significantly depreciated in 2025-2026, largely due to global factors such as a strong USD, high US interest rates, capital outflows, and elevated oil prices.
- The INR’s weakness reflects a combination of structural external imbalances, elevated oil prices, portfolio outflows, and a policy bias toward gradual depreciation rather than forceful intervention.
- The IDR is more fragile, with its weakness stemming from domestic issues such as fiscal deficits, central bank independence concerns, and sensitivity to commodity prices.
- Consequently, Bank Indonesia faces greater pressure to tighten policy, whereas India’s central bank has greater flexibility to manage currency volatility in a more measured way.
