Rupiah Weakens to Rp17,859 as Markets Eye US Monetary Policy

Jakarta (ANTARA) - The rupiah exchange rate against the US dollar weakened by 16 points, or 0.09 percent, to close at Rp17,859 per US dollar on Tuesday, compared to the previous close of Rp17,843 per US dollar. Research and Development analyst at the Indonesia Commodity & Derivatives Exchange (ICDX), Muhammad Amru Syifa, stated that the rupiah’s depreciation came as market participants continued to monitor the direction of US monetary policy. “Pressure on the rupiah still stems from the strengthening of the US dollar, although the depreciation is expected to be limited as some global sentiment begins to show improvement,” he said in Jakarta on Tuesday. The US Dollar Index (DXY) is seen holding around the 101 level amid expectations that the Federal Reserve will keep interest rates elevated for a longer period. The hawkish stance shown by Fed Chair Kevin Warsh and the latest interest rate projections have reinforced market confidence that the possibility of further rate hikes remains open in the coming months. However, the dollar’s strengthening was capped following positive developments in negotiations between the United States and Iran, which helped ease market concerns over energy supply disruptions and global inflationary pressures. From the domestic side, a positive impact is expected from the planned issuance of Panda Bonds using a Local Currency Transaction (LCT) scheme. “This move is considered capable of reducing dependence on the US dollar and supporting medium-term exchange rate stability. Nevertheless, high foreign currency demand for import activities and external debt payments remains a factor limiting the rupiah’s potential to strengthen,” Amru said. Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also moved lower today, standing at Rp17,868 per US dollar, compared to the previous level of Rp17,819 per US dollar.