FX.co ★ Rupiah Slides, Worst Performer in Asia Year-to-Date

The Indonesian rupiah dipped below the 16,650 per dollar threshold on Wednesday, marking its weakest point since the end of April. This decline follows the central bank's decision to reduce its policy rate by a cumulative 150 basis points since September 2024, with market expectations leaning towards further significant easing measures. Meanwhile, apprehensions about the independence of Bank Indonesia have grown, stemming from its "burden sharing" involvement in government expenditure financing. Concurrently, President Prabowo Subianto is vigorously pursuing a bold initiative to elevate GDP growth to 8% from the present 5%. Additional pressure arises as the parliament has ratified the 2026 budget, projecting a deficit of 2.68% of GDP, higher than the initially proposed 2.48%, yet below the current year’s anticipated 2.78%. Since the start of the year, the rupiah has depreciated by 3%, making it the least performing currency in Asia, and has prompted several interventions by Bank Indonesia. On a global scale, the dollar index ticked upward past 97.3, recouping from a two-day slump after Federal Reserve Chair Jerome Powell expressed caution regarding additional policy easing.