Rupiah weakens on concerns over prolonged high Fed interest rates

Jakarta (ANTARA) - The rupiah exchange rate moved weaker by 7lar 72 points or 0.40 per cent to Rp17,931 per US dollar on Wednesday morning, compared to the previous close of Rp17,859 per US dollar.

Currency analyst Lukman Leong from Doo Financial Futures stated that the rupiah’s weakness was triggered by market concerns over high Federal Reserve interest rates throughout 2026.

“The rupiah is expected to continue weakening against a strengthening US dollar amidst strong global risk-off sentiment driven by fears of high interest rates,” he told ANTARA in Jakarta on Wednesday.

Citing Anadolu, the Fed is expected to maintain a tight policy stance throughout 2026 and next year. Increasing expectations of a shift towards tighter monetary policy have led to heightened risks in the market.

Nevertheless, he continued, good news comes from Morgan Stanley Capital International (MSCI), which maintains its emerging market (EM) status for the Indonesian equity market, which could support the rupiah.

“According to the MSCI report, the main considerations are strong economic fundamentals, adequate liquidity and market capitalisation, and the success of capital market reforms by authorities, which have successfully convinced institutional investors,” said Lukman.