Rupiah Extends Losses as Dollar Strength, Fiscal Risks Weigh

The Indonesian rupiah weakened toward IDR 18,040 per U.S. dollar on Thursday, continuing its previous decline amid broad-based dollar strength ahead of next week’s Federal Reserve meeting, where interest rates are widely expected to remain unchanged. Locally, oil prices around USD 100 per barrel added to fiscal concerns, while rising food costs linked to El Niño sustained inflationary pressures. Sentiment was further dampened by President Prabowo Subianto’s criticism of MSCI’s proposed changes to Indonesia’s market classification, raising concerns about potential foreign capital outflows. Still, Bank Indonesia’s liquidity measures may have helped cushion the decline. The central bank held its benchmark rate steady for a fourth consecutive month but raised its deposit facility rate by 25 basis points to 5%. It also announced reserve requirement cuts for commercial banks, from 9% to 8% on Nov. 1 and to 7% on Dec. 1, expected to inject around IDR 190 trillion into the banking system.