Southeast Asian currencies amid US data

In early August, the Malaysian ringgit was largely stable, slipping 0.05% as the dollar softened, while the Indonesian rupiah slipped modestly. By 7 August, the ringgit remained little changed against the dollar, with analysts pointing to a stronger U.S. dollar index and lingering Strait of Hormuz tensions as headwinds. The rupiah, however, closed about 0.15% stronger at 17,897 per dollar, supported by Bank Indonesia’s reported foreign-exchange reserves, solid second-quarter GDP growth, and a de-escalation of Iran-Oman diplomatic tensions that reduced safe-haven demand.

By mid-August, the Indonesian rupiah continued its upward trend, gaining 0.39% over the week ending 14 August to reach approximately Rp 17,827 per U.S. dollar. This appreciation was driven by a decline in the U.S. Dollar Index, which hit a six-day low following cooling U.S. inflation data. Specifically, the July Producer Price Index (PPI) remained unchanged month-on-month, leading markets to reduce the estimated probability of a Federal Reserve interest rate hike in September from 55% to 35%.

By 20 August, the rupiah continued to strengthen, breaking below the Rp 17,700 per U.S. dollar level. This performance followed a narrowing deficit in Indonesia’s balance of payments for the second quarter of 2026. While the weakening greenback has supported various Asian currencies, analysts suggest the rupiah may face consolidation due to geopolitical tensions and global oil price volatility.

By late August, the Malaysian ringgit was expected to maintain support leading up to the Bank Negara Malaysia (BNM) Monetary Policy Committee meeting on 3 September. Analysts anticipate the central bank will maintain the Overnight Policy Rate (OPR) at 2.75 percent, supported by robust second-quarter economic growth of 6 percent and controlled inflation. Market participants continue to monitor U.S. economic indicators, including non-farm payroll (NFP) data and ISM reports, for their impact on the U.S. dollar and interest rate prospects.