Rupiah Weakens, Market Hopes Fed Holds Interest Rates

The rupiah’s exchange rate against the US dollar weakened by 19 points, or 0.11 per cent, to Rp 17,936 per US dollar at Thursday’s trading close, compared with the previous close of Rp 17,917 per US dollar.

Tiffani Safinia, Research & Development analyst at the Indonesia Commodity and Derivatives Exchange (ICDX), said the weakening was influenced by strong expectations that the Federal Reserve (the Fed) will maintain higher interest rates for longer.

“The rupiah’s weakening to Rp 17,936 per US dollar is mainly influenced by global sentiment, namely the continued strength of the US dollar due to expectations that the Federal Reserve will maintain higher interest rates for longer,” she told Antara in Jakarta on Thursday, 23 July 2026.

ICDX reported that markets still anticipate at least one interest rate increase by the end of the year, whilst the US central bank is expected to keep rates unchanged at next week’s Federal Open Market Committee (FOMC) meeting as it monitors inflation developments and economic conditions.

This situation is driving global fund flows towards dollar-based assets, pressuring developing countries’ currencies, including the rupiah.

From the domestic side, she added, Bank Indonesia’s (BI) decision to maintain the BI-Rate at 5.75 per cent demonstrates its focus on safeguarding exchange rate and inflation stability.

“However, the rupiah’s strengthening remains limited because the interest rate differential with the United States is not yet attractive enough to draw foreign capital inflows, amid still-high domestic demand for foreign exchange,” said Tiffani.

The Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened today to Rp 17,919 per US dollar, from Rp 17,909 previously.