Rupiah Weakens as Dollar Firms and Political Risks Mount
The Indonesian rupiah slipped past IDR 18,150 per U.S. dollar on Wednesday, reversing recent gains as a firmer dollar weighed on sentiment following hotter-than-expected U.S. inflation that fueled bets on further Fed rate hikes. The rupiah led regional losses amid mounting political uncertainty after Vice President Gibran Rakabuming reportedly offered to resign amid legal challenges over the validity of his education documents. Concerns over foreign outflows also resurfaced ahead of MSCI's November review of Indonesia's stock market. Meanwhile, recent retail sales data pointed to cooling consumer spending despite robust Q3 GDP growth. Bank Indonesia continued intervening to support the currency, but concerns grew over a policy dilemma between defending the rupiah and sustaining economic growth. The central bank will hold its November policy meeting next week after maintaining its key rate for a fourth straight month in October, following cumulative hikes of 100bps in May and June.
The Indonesian rupiah slipped past IDR 18,150 per U.S. dollar on Wednesday, reversing recent gains as a firmer dollar weighed on sentiment following hotter-than-expected U.S. inflation that fueled bets on further Fed rate hikes. The rupiah led regional losses amid mounting political uncertainty after Vice President Gibran Rakabuming reportedly offered to resign amid legal challenges over the validity of his education documents.
Concerns over foreign outflows also resurfaced ahead of MSCI's November review of Indonesia's stock market. Meanwhile, recent retail sales data pointed to cooling consumer spending despite robust Q3 GDP growth. Bank Indonesia continued intervening to support the currency, but concerns grew over a policy dilemma between defending the rupiah and sustaining economic growth. The central bank will hold its November policy meeting next week after maintaining its key rate for a fourth straight month in October, following cumulative hikes of 100bps in May and June.