Rupiah weakens following hawkish statement from the Fed

Jakarta (ANTARA) - The rupiah exchange rate weakened by 94 points, or 0.53 percent, to Rp17,856 per US dollar on Thursday morning, compared to the previous close of Rp17,762 per US dollar.

Analyst Rully Nova from Bank Woori Saudara assessed that the rupiah’s depreciation was influenced by a hawkish statement from the Federal Reserve.

“The rupiah is expected to weaken today in the range of Rp17,730 to Rp17,810, influenced by the global factor of the Fed’s interest rate decision last night, which remained unchanged, and the Fed’s hawkish statement that rates will stay high for longer, dashing hopes for a single rate cut this year, and pushing the dollar index above 100,” he told ANTARA in Jakarta on Thursday.

Citing Anadolu, the Fed decided to maintain its benchmark interest rate in the range of 3.5-3.75 percent. The decision marked the Federal Open Market Committee (FOMC) meeting under Kevin Warsh as Fed Chair amid inflation threats, energy supply shocks, and geopolitical uncertainty due to conflict in the Middle East. The Fed emphasised maintaining ample reserves in the banking system and said this would provide price stability.

Domestic sentiment is influenced by the potential for Bank Indonesia (BI) to hold its benchmark interest rate. “BI is expected to hold the benchmark rate at the BI Board of Governors meeting this afternoon, although there is still room for another increase next month,” said Rully.