FX.co ★ Rupiah Falls for Sixth Session After Fed Rate Hike

The Indonesian rupiah weakened toward IDR 17,750 per U.S. dollar on Thursday, extending its losing streak to a sixth consecutive session, as the dollar index climbed to a seven-week high. The move followed the U.S. Federal Reserve’s first interest rate hike in three years and its signal that further tightening may follow this year to tackle persistent inflation.

Domestically, markets are focused on Bank Indonesia’s policy meeting next week. The central bank kept its benchmark rate unchanged at 5.75% for a second consecutive month in August, after a cumulative 100 basis points of tightening since May. The policy outlook is becoming more complex amid mounting inflation risks from higher oil prices and potential El Niño-related disruptions, as Bank Indonesia tries to maintain a sufficient interest-rate differential while supporting rupiah stability and economic growth.

At the same time, fiscal pressures may remain elevated, with higher global yields and cautious investor sentiment continuing to weigh on Indonesian assets. So far this week, the rupiah has fallen about 0.8%, erasing the gains it had accumulated over the previous six weeks.