Rupiah movement influenced by hawkish signals from the Fed

The Federal Reserve has raised the Fed Funds Rate (FFR) by 25 basis points to 3.75–4.00 per cent, signalling a hawkish stance for the future, according to Josua Pardede, Chief Economist at Permata Bank.

Quoting Xinhua, the updated economic projections summary from Federal Open Market Committee (FOMC) participants indicates that most Fed officials anticipate policy interest rates will rise to the 4 per cent to 4.25 per cent range by the end of 2026. This move is driven by their efforts to combat persistent inflation caused by supply shocks and geopolitical pressures.

The Federal Reserve still has two more meetings scheduled for this year, specifically at the end of October and early December 2026.

In related global news, US Energy Secretary Chris Wright reported that Saudi Arabia’s primary East-West crude oil pipeline is expected to resume operations shortly. The pipeline was shut down last weekend after being damaged by a drone attack originating from Iraq.

Riyadh has been utilising the pipeline to divert crude oil exports to the Red Sea amidst the US-Iran struggle for control in the Strait of Hormuz. Although the pipeline remains temporarily closed, Saudi Arabia is diverting some oil shipments through Hormuz with support from the US military, according to Wright.

“Today, we expect the rupiah to move within the range of Rp17,700–Rp17,850 per US dollar,” said Josua.