Rupiah weakens under pressure from rising US bond yields

Jakarta (ANTARA) - The rupiah exchange rate against the US dollar weakened by 25 points, or 0.14 per cent, at the opening of trading on Monday, reaching Rp17,783 per US dollar compared to the previous close of Rp17,758 per US dollar.

Lukman Leong, an analyst at Doo Financial, stated that the rupiah’s depreciation was influenced by the rise in US bond yields.

“The rupiah is expected to still have the potential to weaken against the US dollar amidst the rise in US bond yields due to the prospect of Federal Reserve interest rate hikes, which is putting pressure on Bank Indonesia (BI) ahead of the BI Board of Governors Meeting this Wednesday (23/9),” he told ANTARA in Jakarta on Monday.

The Federal Open Market Committee (FOMC) decided to raise the federal funds rate to a range of 3.75 per cent to 4.0 per cent on Wednesday (16/9/2026). This marks the first interest rate hike by the US central bank since July 2023.

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

Quoting Xinhua, the updated economic projection summary by Federal Open Market Committee (FOMC) participants shows that most Fed officials expect the policy rate to rise to a range of 4 per cent to 4.25 per cent by the end of 2026.

Projections of Fed rate hikes have kept the 10-year US bond yield at 5 per cent, while the 2-year yield has risen to 4.756 per cent, its highest level since 2024.

Bank Indonesia is expected to maintain its interest rate during the meeting on Wednesday (23/9). BI is scheduled to hold its Monthly Board of Governors Meeting on 22-23 September 2026 next week.

Based on these factors, the rupiah is predicted to fluctuate between Rp17,700 and Rp17,850 per US dollar.