Indonesian Rupiah strengthens after Q3 GDP exceeds forecasts

• Indonesia’s GDP expanded by 5.47% year on year in Q3 2026, exceeding the market forecast of 5.2%.
• The Greenback came under considerable pressure from a Democratic election sweep in the US and lower oil prices.
• Robust US ADP employment figures and an 82% probability of a Fed rate rise limited wider US dollar losses.

Following the release of    third-quarter Gross Domestic Product (GDP) figures, the Indonesian Rupiah (IDR) retains its gains against the US Dollar (USD). USD/IDR is trading near 18,110 during Thursday’s Asian session, remaining under pressure for a second consecutive day.

GDP growth in Indonesia picked up to 5.47% year on year in the third quarter of 2026, exceeding the 5.2% market forecast and rebounding strongly from Q2’s three-quarter low of 5.29%. Quarter-on-quarter growth reached 1.59%, comfortably above the consensus forecast of 1.3%, although sharply slower than the previous quarter’s 3.73% increase.

A weaker Greenback following the Democratic sweep in the US midterm elections weighed on USD/IDR. Investors became more concerned about political gridlock in Washington after Democrats secured control of both houses of Congress. Expectations of a rapid resolution to the Middle East conflict also prompted a sharp fall in oil prices, adding to pressure on the US dollar.

Resilient US economic figures could nevertheless provide underlying support for the US dollar (USD), having strengthened expectations that the Federal Reserve will tighten monetary policy further. According to ADP, private-sector employment rose by 86,000 in October, above the forecast of 69,000, despite a small downward revision to September’s reading. At 54.5, the ISM Services PMI was marginally weaker than expected but continued to point to steady expansion across the services sector.

With the CME FedWatch Tool indicating nearly an 82% chance of a Fed rate rise in December, financial markets remain firmly positioned for tighter US monetary policy. Investors are looking to forthcoming US labour market releases for fresh direction, notably Thursday’s weekly initial jobless claims and Friday’s nonfarm payrolls report.

USD moves towards the middle of its smile as analysts view dollar weakness as a relief rally

Rather than signalling the beginning of a more disorderly decline, the recent weakness in the Dollar against G10 currencies represents “something of a ‘relief rally’”, according to Scotiabank analysts. In their assessment, the market moves reflect “a shift in the USD toward the middle of its ‘smile’, in which relative growth and interest rate differentials narrow as the US/USD drift from the edge linked to exceptionalism – with the other edge of the smile tied to sentiment-driven risk aversion.”