Rupiah Closes Weaker at Rp17,753 Following Fed Rate Hike
The Rupiah exchange rate closed weaker in afternoon trading on Thursday (17/9). The Rupiah corrected by 57 points, settling at the level of Rp17,753 per US dollar, compared to the previous close of Rp17,696 per US dollar.
Currency and commodity observer Ibrahim Assuaibi projects that for Friday’s trading (18/9), the Rupiah will move fluctuatedly but tend to close weaker within the range of Rp17,750 to Rp17,790 per US dollar.
The weakening of the Rupiah was triggered by the move by the US central bank, the Fed, which raised the Federal Funds Rate (FFR) benchmark interest rate to the range of 3.75% to 4.0% on Wednesday (16/9) local time. Ibrahim noted that this is the first interest rate hike by the US central bank since July 2023.
Fed Chair Kevin Warsh, in his press conference, emphasised deep concerns regarding inflation. Warsh highlighted that many categories of products and services recorded annual price increases above 3% over the last 6 to 12 months. This provides a strong signal that further interest rate hikes remain possible in the coming months.
From a domestic perspective, the room for Bank Indonesia (BI) to further raise the benchmark interest rate is considered to be narrowing. Ahead of the Board of Governors Meeting (RDG) scheduled for 22–23 September 2026, analysts predict that BI will maintain its current monetary policy (status quo).
Ibrahim explained that BI’s previous aggressive move, which raised interest rates by 100 basis points, was a precise pre-emptive step. This manoeuvre is considered to have exceeded the aggressiveness of the Fed, meaning BI does not need to rush into additional adjustments.
“The slowly hardening macroeconomic fundamentals also serve as a shield for BI. The Rupiah exchange rate condition, which is gradually stabilising in the 17,300-17,800 range, strong foreign capital inflows, and fiscal discipline strengthen the space for the central bank to monitor the situation without needing to apply additional brakes,” concluded Ibrahim.
US President Donald Trump has urged the Fed to immediately lower interest rates to 1% or lower following the recent increase to 3.75-4 percent.
The Rupiah exchange rate opened weaker by 43 points to the level of Rp17,739 per US dollar on Thursday (17/9) following the 25 basis point interest rate hike by the Fed.
UOB ASEAN Economist Enrico Tanuwidjaja suggested that the government provide reinvestment incentives for existing investors to maintain the stability of the Rupiah exchange rate.