FX.co ★ Rupiah Extends Losses as Dollar Strength, Fiscal Risks Weigh

The Indonesian rupiah weakened toward IDR 18,040 per U.S. dollar on Thursday, extending its recent slide amid broad-based dollar strength ahead of next week’s Federal Reserve meeting, where interest rates are widely expected to be left unchanged. Domestically, Brent crude prices near USD 100 per barrel have amplified fiscal concerns, while a sharper increase in food prices linked to El Niño has kept inflationary pressures elevated.

Market sentiment was further undermined by President Prabowo’s criticism of MSCI’s proposed changes to Indonesia’s market classification, which has intensified worries over potential foreign capital outflows. Even so, Bank Indonesia’s recent liquidity measures appear to have helped limit the rupiah’s losses.

The central bank left its benchmark policy rate unchanged for a fourth consecutive month but raised the deposit facility rate by 25 basis points to 5%. It also announced a phased reduction in reserve requirements for commercial banks—from 9% to 8% effective November 1, and then to 7% from December 1—measures expected to inject roughly IDR 190 trillion into the banking system.