Rupiah Continues to Weaken, Dollar Rises to Rp17,700
The rupiah exchange rate has been unable to escape pressure, opening weaker against the US dollar in this morning’s trading.
According to Refinitiv data, the rupiah began trading on Wednesday (16/09/2026) at the Rp17,700/US$ position, representing a depreciation of 0.11%. This pressure continues after the rupiah recorded losses for four consecutive trading days. On Tuesday (15/09/202<0xA0>6), the Garuda currency closed down 0.26% at the level of Rp17,685/US$.
Meanwhile, the US Dollar Index (DXY), which measures the strength of the greenback against six major world currencies, was observed to strengthen by 0.12% to the 99.730 position at 09:00 WIB. This strengthening continues the DXY’s 0.23% increase from the previous trading session.
The rupiah’s movement throughout the day is expected to remain influenced by external sentiments, particularly the market’s anticipation of the Federal Reserve’s interest rate decision. The Fed is holding its policy meeting on 15-16 September 2026, with the interest rate decision scheduled to be announced on Thursday early morning, Indonesian time.
Ahead of the announcement, the US dollar has maintained its strength and remains near multi-week highs against several major currencies. Rising US government bond yields have also provided momentum to the greenback.
Market participants expect the Fed to raise interest rates by 25 basis points. Based on market calculations, the probability of such an increase has reached approximately 90%.
“A 25 basis point increase has been priced in at around 90%, so the dollar will only receive a moderate boost if the Fed raises rates,” said Commonwealth Bank of Australia Currency Strategist Carol Kong, as quoted by Reuters.
If realised, this decision would mark the Fed’s first interest rate hike in over two years. Markets are also beginning to factor in the possibility of further hikes to curb inflationary pressures resulting from the war with Iran and surging energy prices.
Nevertheless, the direction of the dollar will not be determined by the interest rate decision alone. Statements from Fed Chair Kevin Warsh regarding future policy steps will also be a primary focus.
If the Fed raises interest rates but Warsh dampens the possibility of further hikes, the dollar could potentially lose some of its momentum. Conversely, signals that interest rates will be raised again could sustain the greenback’s strength.
Markets also face a small possibility of the Fed maintaining interest rates. According to Kong, such a decision could trigger a decline in the dollar of more than 1% as it would run contrary to the majority of market expectations.
The strengthening dollar and high US bond yields could increase the attractiveness of dollar-denominated assets. This condition has the potential to maintain pressure on the Garuda currency ahead of the Fed’s policy announcement.