FX.co ★ Rupiah Extends Weekly Losses Despite Softer Dollar

The Indonesian rupiah traded around IDR 18,080 per U.S. dollar on Friday, holding above the 18,000 level for a third consecutive session despite broad weakness in the greenback. The dollar index hovered near a three-week low as U.S. Treasury yields declined sharply.

Even so, domestic factors continued to pressure the rupiah. Fiscal risks remained elevated with global oil prices approaching USD 100 per barrel, a concern for Indonesia as a net oil importer. At the same time, worries intensified that Bank Indonesia (BI) may face a challenging trade-off between defending the currency and supporting short-term economic growth.

Earlier in the week, BI left its benchmark interest rate unchanged for a fourth straight month but increased the deposit facility rate by 25 basis points. The central bank also announced a gradual reduction in the reserve requirement ratio for commercial banks, effective November 1, a move expected to inject about IDR 190 trillion into the banking system.

For the week, the rupiah was set for a second consecutive weekly loss, down about 0.6%, extending its year-to-date depreciation to roughly 8%.