Rupiah Falls for Sixth Session After Fed Rate Hike

The Indonesian rupiah slipped toward IDR 17,750 per U.S. dollar Thursday, extending its losing streak to six sessions as the dollar index climbed to a seven-week high after the U.S. Fed raised rates for the first time in three years and signaled the possibility of further tightening this year to curb sticky inflation. Locally, focus turned to Bank Indonesia’s policy meeting next week, with policymakers having kept key rates unchanged at 5.75% for a second straight month in August, following cumulative tightening of 100bp since May. Inflation risks from higher oil prices and potential El Niño effects are complicating the policy outlook, as the central bank faces the challenge of preserving an adequate interest-rate differential while supporting rupiah stability. Meantime, fiscal pressures may persist as elevated global yields and cautious foreign investor sentiment weigh on Indonesian assets. So far this week, the rupiah has fallen around 0.8%, reversing gains in the prior six weeks.