The Fed Raises Interest Rates, Dollar Opens Higher at Rp17,705
The rupiah exchange rate lost momentum against the US dollar at the opening of trading this morning. The ‘Garuda’ currency came under pressure after the US central bank raised its benchmark interest rate.
According to Refinitiv data, the rupiah opened 0.17% weaker at Rp17,705/US$ in trading on Thursday (17/09/2026). This movement reverses the slight gains seen on Wednesday (16/09/2026), when the rupiah appreciated 0.03% to close at the Rp17,675/US$ level.
Meanwhile, the US Dollar Index (DXY), which measures the strength of the greenback against six major world currencies, was observed to have strengthened by 0.05% to 100.315 at 09:00 WIB. This strengthening continues a 0.64% rise in the DXY during the previous trading session.
The rupiah’s movement today is expected to be heavily influenced by external sentiment, particularly the strengthening of the US dollar in global markets following the Federal Reserve’s decision to raise its benchmark interest rate. The Fed raised the rate by 25 basis points to 3.75%-4.00%. The US central bank also signalled that the possibility of one more rate hike remains open until the end of the year.
The decision was announced on Wednesday US time, or early Thursday Indonesia time, after the Fed held its two-day Federal Open Market Committee (FOMC) meeting. This increase is the first since July 2023, or in more than three years. The decision was made unanimously with a 12-0 vote from FOMC members.
“Inflation remains at a high level. The policy taken today is expected to support a faster return of inflation to the Fed’s 2% target,” the Fed wrote in its official statement. Notably, US inflation was recorded at 3.4% year-on-year in August 2026, which remains above the Fed’s 2% target.
In a press conference, Fed Chair Kevin Warsh emphasised that price stability remains the central bank’s primary focus. According to him, inflation is still 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 at an adequate pace. Today, the FOMC decided that this standard has not yet been met,” Warsh stated, as quoted by CNBC International.
Previously, the Fed maintained interest rates at the 4.25%-4.50% level until August 2025. Rates were then cut in September, October, and December 2025 to a range of 3.50%-3.75%. From January to July 2026, the Fed maintained rates before finally raising them at the September meeting.
The interest rate hike and the possibility of further tightening have increased the attractiveness of US dollar-denominated assets. This condition has driven the strengthening of the greenback while narrowing the room for appreciation in emerging market currencies, including the rupiah.