Rupiah closes weaker following Fed decision to raise FFR

The rupiah exchange rate against the US dollar at the close of trading on Thursday weakened by 57 points, or 0.32 per cent, to Rp17,753 per US dollar compared to the previous close of Rp17,696 per US dollar.

Currency analyst and Director of Forexindo Berjangka, Ibrahim Assuabi, assessed that the rupiah’s weakness was influenced by the Federal Reserve’s decision to raise the Federal Funds Rate (FFR).

“The Federal Open Market Committee (FOMC) decided unanimously to raise the benchmark federal funds rate to a range of 3.75 per cent to 4.0 per cent on Wednesday (16/9). This marks the first interest rate hike by the US central bank since July 2023,” he stated in a written statement in Jakarta on Thursday.

During a press conference, Fed Chair Kevin Warsh emphasised his concerns regarding inflation, noting that too many categories of products and services are showing annual price increases above 3 per cent over 6 and 12-month periods. Consequently, Warsh hinted at further rate hikes in the coming months.

“However, US President Donald Trump on Wednesday (16/9) demanded that the US central bank cut interest rates to 1 per cent or lower, just hours after the Fed announced its first rate hike since 2023. This indicates ongoing friction between the White House and the independent Fed,” Ibrahim added.

Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also moved weaker to the level of Rp17,753 per US dollar from the previous level of Rp17,712 per US dollar.