FX.co ★ Rupiah Rises But Set for First Weekly Decline in 7 Weeks

The Indonesian rupiah inched higher to below IDR 17,750 per U.S. dollar on Friday, ending a six-session losing streak as further declines in oil prices helped ease concerns over imported inflation. At the same time, policymakers intensified efforts to curb food-price volatility after headline inflation quickened to 3.19% in August. On the global front, the dollar index stabilized after touching a seven-week high, with investors evaluating the Federal Reserve’s policy outlook in the wake of its latest rate decision.

Despite Friday’s rebound, the rupiah remains on course for a weekly loss of about 0.7%, which would break a six-week winning streak. Market sentiment has been weighed down by policy uncertainty, as Bank Indonesia attempts to preserve a sufficient interest-rate premium over the U.S. while simultaneously supporting rupiah stability and economic growth. The central bank is scheduled to hold its next policy meeting next week, after keeping borrowing costs unchanged for a second consecutive month in August.