FX.co ★ Rupiah Slides for 4th Session Ahead of Key Domestic Data

The Indonesian rupiah fell to approximately IDR 16,780 per dollar on Wednesday, continuing its decline for the fourth consecutive session. This drop was influenced by a robust dollar index, as investors anticipated new U.S. economic data slated for release in the coming days that may impact Federal Reserve policy expectations. Investor caution also prevailed due to forthcoming domestic indicators, including December's forex reserves and consumer sentiment data expected later this week, and retail sales figures due next week. Recent statistics indicated increasing cost pressures, with headline inflation rising to a 20-month high of 2.92% in December, and core inflation reaching a seven-month peak. Nevertheless, both figures remained within Bank Indonesia's target range, reducing the immediate need for policy tightening. The central bank has, in fact, hinted at potential policy easing in the new year to support economic growth following the Sumatra disaster, after implementing 150 basis points of rate cuts over the previous year. Sentiment was also dented by external challenges, with a slowdown in export momentum, particularly in significant commodities like coal.