Rupiah Extends Weekly Losses Despite Softer Dollar

The Indonesian rupiah held near IDR 18,080 per U.S. dollar on Friday, remaining above the 18,000 mark for a third session despite broad weakness in the greenback. The dollar index hovered near a three-week low as Treasury yields fell sharply, offering limited relief to the rupiah. Locally, fiscal concerns lingered amid persistently high oil prices near USD 100 per barrel, given Indonesia’s status as a net oil importer. Worries also grew that Bank Indonesia may face a difficult trade-off between defending currency stability and supporting near-term growth. Earlier this week, Bank Indonesia kept its key interest rate unchanged for a fourth month but raised the deposit facility rate by 25bps. It also gradually slashed the reserve requirement ratio for commercial banks effective Nov. 1, adding around IDR 190 trillion to the financial system. For the week, the rupiah was on track for a second consecutive weekly decline, down around 0.7% so far, bringing its year-to-date loss to roughly 8%.