Rupiah Under strain as Dollar Rises, Fiscal Concerns Mount

2026-09-24 05:16 By Farida Husna 1 min. read

The Indonesian rupiah slipped to near IDR 17,900 per U.S.

dollar on Thursday, extending its recent decline as the dollar index hovered near a two-month high amid surging U.S.

Treasury yields and bets on further policy tightening following solid U.S.

private-sector activity.

Locally, fundamentals remained weak, pressured by softer consumer confidence and sluggish household spending.

Fiscal worries added pressure as higher oil prices lifted budget risks while lawmakers pushed to amend the State Finance Law to allow deficits above 3% of GDP.

Bank Indonesia has sought to support the currency through measures beyond interest rates, including raising the FX swap hedging incentive to 25% to encourage foreign capital inflows and curb speculative pressure.

The central bank kept its benchmark rate at 5.75% for a third month in September after raising it by a cumulative 100bp in three moves since May.

The rupiah has weakened about 0.8% so far this week, setting up a second straight weekly loss.



News Stream
Rupiah Under strain as Dollar Rises, Fiscal Concerns Mount
The Indonesian rupiah slipped to near IDR 17,900 per U.S. dollar on Thursday, extending its recent decline as the dollar index hovered near a two-month high amid surging U.S. Treasury yields and bets on further policy tightening following solid U.S. private-sector activity. Locally, fundamentals remained weak, pressured by softer consumer confidence and sluggish household spending. Fiscal worries added pressure as higher oil prices lifted budget risks while lawmakers pushed to amend the State Finance Law to allow deficits above 3% of GDP. Bank Indonesia has sought to support the currency through measures beyond interest rates, including raising the FX swap hedging incentive to 25% to encourage foreign capital inflows and curb speculative pressure. The central bank kept its benchmark rate at 5.75% for a third month in September after raising it by a cumulative 100bp in three moves since May. The rupiah has weakened about 0.8% so far this week, setting up a second straight weekly loss.
2026-09-24
Rupiah Hovers Near IDR 17,820 Following BI Rate Move
The Indonesian rupiah traded near IDR 17,820 per U.S. dollar on Wednesday afternoon, recovering from an intraday low of IDR 17,875, after Bank Indonesia held its benchmark rate steady at 5.75% for a third month, in line with estimates. The decision was the first policy meeting under newly appointed Governor Destry Damayanti and followed a total 100bp increase in three moves during May and June, when policymakers tightened policy to support the currency after it fell to record lows against the dollar. The rupiah has since regained some ground but faced renewed pressure in recent weeks as concerns over Indonesia’s fiscal outlook intensified amid higher oil prices and lawmakers’ push to revise the 2003 State Finance Law and allow a wider deficit above 3% of GDP. A still-wide interest-rate differential offered some support, while a firmer U.S. dollar tempered gains. The dollar index stood near an eight-week high as hawkish Fed signals reinforced bets on additional hikes later this year.
2026-09-23
Rupiah Holds Near IDR 17,800 Ahead of BI Rate Call
The Indonesian rupiah hovered near IDR 17,800 per U.S. dollar on Wednesday, extending recent gains as traders awaited Bank Indonesia’s policy decision later today. Markets expect the central bank to leave its benchmark rate unchanged at 5.75% for a third straight month as policymakers balance currency stability against domestic growth amid heightened global macro pressures. The board has already delivered 100bps of cumulative tightening earlier this year, leaving less room for further aggressive hikes without weighing on economic activity. Meanwhile, falling oil prices eased concerns over imported inflation and fiscal strain, although domestic price pressures persisted after annual inflation accelerated to 3.19% in August, driven partly by higher food prices amid El Niño-related supply disruptions. However, a firm U.S. dollar capped the rupiah’s gains, with the dollar index holding near an eight-week high as hawkish Fed signals reinforced bets of another rate hike later this year.
2026-09-23