FX.co ★ Rupiah Weakness Persists Amid Dollar Strength, Oil Rally

The Indonesian rupiah weakened to around 16,910 per dollar on Thursday, its third consecutive session of losses, as the US dollar index strengthened and oil prices resumed their rally. These moves have intensified global inflation concerns and dampened expectations for near-term interest rate cuts by the Federal Reserve. Investor caution also increased ahead of Bank Indonesia’s policy meeting next week. The central bank kept its benchmark rate at 4.75% in February for a fifth straight meeting, following a cumulative 150 basis points of easing since September 2024. Policymakers have indicated there is still room for additional cuts if conditions permit, as they seek to bolster growth after last year’s disaster in Sumatra weighed on economic activity. Bank Indonesia expects momentum to pick up in the first quarter of 2026, supported by stronger household spending during the festive period and continued investment. Despite the recent decline, the rupiah is still up about 1.2% year-to-date, underpinned by the central bank’s active intervention in spot and forward markets to maintain currency stability.