The Fed 'Burns' Asian Currencies; Rupiah and Ringgit Fall, Two Nations Remain Safe
Most Asian currencies weakened against the US Dollar in trading on Thursday (17/09/2026). Pressure arrived after the US central bank (The Federal Reserve/The Fed) officially raised interest rates and opened the possibility of further increases until the end of the year.
According to Refinitiv data as of 09:19 WIB, US Dollar pressure was felt quite evenly across Asia. Out of ten monitored currencies, eight weakened against the US Dollar, while only two were able to strengthen.
The Thai Baht was the most pressured currency this morning, weakening 0.39% to a position of THB 33.41/US$.
Further pressure was felt by the Indonesian Rupiah and the Malaysian Ringgit, which both weakened by 0.31%. The Rupiah fell to a position of Rp17,730/US, whiletheMalaysianRinggitmovedtoMYR4.095/US.
The South Korean Won also entered the list of currencies facing significant pressure, weakening 0.29% to KRW 1,380.8/US.TheVietnameseDongdropped0.10, followed by the Taiwan Dollar, which corrected 0.09% to TWD 31.86/US$.
The Chinese Yuan weakened 0.06% to CNY 6.7103/US, whilethePhilippinePesofellslightlyby0.01.
Amidst this pressure, the Singapore Dollar was still able to strengthen by 0.09% to SGD 1.277/US.TheJapaneseYenalsoremainedinthegreenwithanincreaseof0.08.
Asian currency movements this morning are still overshadowed by the strengthening US Dollar. The US Dollar Index (DXY) was observed to have strengthened by 0.07% to a position of 100.324.
The DXY continued its strengthening after rising 0.63% in the previous trading session. The DXY position, which has returned above the 100 level, indicates that the US Dollar is regaining significant momentum following the Fed’s decision.
The Fed officially raised the benchmark interest rate by 25 basis points to a range of 3.75%-4.00%. This decision was announced on Wednesday US time, or early Thursday Indonesia time, after the FOMC held a two-day meeting.
This increase marks the first interest rate hike by the Fed since July 2023, or more than the last three years. The decision was also made unanimously by the 12 members of the FOMC.
“Inflation remains at a high level. The policy taken today is expected to support the return of inflation to the Fed’s 2% target more quickly,” the Fed wrote in its official release.
In a press conference, Fed Chair Kevin Warsh emphasised that price stability remains the primary focus of the US central bank. He stated that inflation remains too high and has persisted at that level for too long.
“We must be confident that underlying inflation is moving towards our target clearly and with sufficient speed. Today, the FOMC decided that this standard has not yet been met,” said Warsh, as quoted by CNBC International.
The Fed’s more hawkish stance has caused the US Dollar to strengthen again. According to the dot plot, the Fed showed that 16 out of 18 officials anticipate at least one more interest rate hike of 25 basis points by the end of this year.
Karl Schamotta, chief market strategist at Corpay, assessed that the decisive rate hike, supported by all FOMC members, could help restore market confidence in the Fed’s commitment to fighting inflation.
“Today’s decisive hike, supported by all FOMC members and accompanied by an increase in projections in the dot plot, should help restore confidence in the Fed’s commitment to fighting inflation and remove the major obstacle that has been weighing on the dollar,” said Schomatta, as quoted by Reuters.
The US Dollar also received a boost from signals that US monetary policy could remain tighter into next year. The Fed’s latest statements and projections open the possibility for interest rates to move to a range of 4.00%-4.25% by the end of this year.
David Krakauer, vice president of portfolio management at Mercer Advisors, assessed that the unanimous FOMC decision is a strong signal that the Fed, under Warsh, is prepared to act to curb inflation.
“Today’s unanimous decision is the clearest signal that the Fed, under Warsh, is united, data-driven, and prepared to act,” said Krakauer, as quoted by Reuters.