USD/IDR holds gains near 16,300 as Bank Indonesia delivers a quarter basis point rate cut

• USD/IDR maintains its position as Bank Indonesia decided to cut its benchmark interest rate by 25 basis points in July.
• The Trump administration decided to impose a 19% tariff, against the previous 32% threat, on Indonesian goods.
• The US Dollar may further appreciate as June inflation report raised the likelihood of Fed maintaining its current interest rates.

USD/IDR extends its winning streak for the third successive session, trading around 16,300 during the European hours on Wednesday. The pair holds gains following the Bank Indonesia (BI) interest rate decision.

Bank Indonesia cut its benchmark interest rate by 25 basis points to 5.25% at its July policy meeting, in line with market expectations. The decision reflects the central bank's outlook that inflation for 2025-2026 will remain within its target range of 2.5% ±1%.

On Tuesday, US President Donald Trump announced a new trade agreement with Indonesia that sets a 19% tariff on Indonesian goods entering the United States (US), down from the previously threatened 32%. The agreement is part of the administration's broader effort to renegotiate trade deals and reduce the US trade deficit. It also includes substantial commitments from Indonesia to increase purchases of American products.

The USD/IDR pair may further appreciate as the US Dollar (USD) may regain its ground, as the US inflation report for June has renewed concerns over the prospect of prolonged high interest rates from the Federal Reserve (Fed).

The US Consumer Price Index (CPI) climbed 2.7% year-over-year in June, as expected. Core CPI came in at 2.9%, just below the 3.0% forecast but still notably above the Federal Reserve's 2% target. Traders await the US Producer Price Index (PPI) later on Wednesday, followed by the Fed Beige Book and Industrial Production.