Rupiah Under Pressure as Dollar Holds Near Two-Month High
The Indonesian rupiah stayed above IDR 18,000 per U.S. dollar on Tuesday, hovering near its weakest since early August, as a firm dollar weighed on sentiment. The greenback held close to a two-month high on expectations of further Fed tightening, with higher energy prices adding to inflation risks. Domestically, caution lingered ahead of August trade and September inflation data. Annual inflation quickened to 3.19% in August, lifted by food costs amid El Niño-related supply disruptions. Fiscal and external risks persisted, particularly from elevated crude prices given Indonesia’s reliance on imports. Economists warned that prolonged rupiah weakness could hurt growth by raising costs of imported inputs, energy, and capital goods. Still, the downside was partly contained by Bank Indonesia’s interventions across offshore NDFs, domestic spot, and DNDF markets. The board kept its benchmark rate at 5.75% last week for a third straight month after cumulative 100bp hikes between May and June.
S. dollar on Tuesday, hovering near its weakest since early August, as a firm dollar weighed on sentiment. The greenback held close to a two-month high on expectations of further Fed tightening, with higher energy prices adding to inflation risks. Domestically, caution lingered ahead of August trade and September inflation data.
19% in August, lifted by food costs amid El Niño-related supply disruptions. Fiscal and external risks persisted, particularly from elevated crude prices given Indonesia’s reliance on imports. Economists warned that prolonged rupiah weakness could hurt growth by raising costs of imported inputs, energy, and capital goods. Still, the downside was partly contained by Bank Indonesia’s interventions across offshore NDFs, domestic spot, and DNDF markets.
75% last week for a third straight month after cumulative 100bp hikes between May and June.