FX.co ★ Rupiah Nears IDR 18,100 as Markets Assess Fed and BI Leadership Risks

The Indonesian rupiah weakened toward IDR 18,100 per dollar on Tuesday, extending losses into a second session as the US dollar remained firm ahead of this week’s Federal Reserve policy decision. At home, market sentiment was shaken by the resignation of Governor Perry Warjiyo, with Senior Deputy Governor Destry Damayanti stepping in as acting chief until a permanent successor is appointed.

The leadership transition comes at a delicate time, as Indonesia grapples with fiscal pressures, uncertainty over the government’s policy agenda, and waning foreign investor confidence, all of which are weighing on local assets. Concerns about the central bank’s independence have also intensified following President Prabowo’s decision to appoint his nephew to Bank Indonesia’s board.

Investors are now focused on the upcoming government securities auctions for clues on the central bank’s commitment to supporting the rupiah. Last week, the board surprised markets by leaving the benchmark interest rate unchanged at 5.75%, defying expectations of another increase after a cumulative 100 basis points of tightening since May. The rupiah has depreciated nearly 8% so far this year, making it one of Asia’s worst-performing currencies.