FX.co ★ Rupiah Faces Headwinds Despite Partial Recovery

The Indonesian rupiah weakened to IDR 18,185 per U.S. dollar on Thursday before recovering to around IDR 18,120, after Bank Indonesia reiterated its commitment to support the currency through NDF, DNDF, and spot market interventions, as well as government bond purchases in the secondary market. At the same time, the U.S. dollar index extended its recent losses after the Federal Reserve left interest rates unchanged, in line with market expectations.

Overall sentiment remained fragile amid a mix of domestic and external headwinds. Indonesia’s 10-year government bond yield climbed to 7.7% on Tuesday, its highest level in four years and above the 2026 budget assumption of 6.9%. The move underscored mounting concerns over fiscal risks and inflation, compounded by elevated U.S. yields. Persistent foreign outflows added further pressure, reflecting uncertainty over Indonesia’s MSCI market classification, with a possible downgrade to standalone status next year fueling worries about additional capital flight.

Market participants are now focused on key data releases due next week, including September trade figures and October inflation, for further signals on the economic outlook and policy trajectory.