Rupiah set for biggest weekly fall since May as higher US yields, stronger dollar bite
TLT•Indonesia’s rupiah was set for its biggest weekly fall since late May, weakening as much as 0.3% to 17,935 per dollar and losing nearly 1% this week. Rising US Treasury yields and a stronger dollar pressured the currency as Bank Indonesia held its benchmark rate at 5.75%.
1. Rupiah under pressure
The rupiah weakened as much as 0.3% on Friday to 17,935 per dollar and had fallen nearly 1% so far this week. It was set for its biggest weekly decline since late May, pressured by higher US Treasury yields, a stronger dollar and expectations that US interest rates will stay higher for longer.
2. Bank Indonesia holds rate
Bank Indonesia kept its benchmark interest rate at 5.75% on Wednesday, after raising it by a cumulative 100 basis points between May and June. The central bank signalled it would support the rupiah through market-based measures as elevated oil prices and higher US yields pressure the currency.
3. Regional market moves
The rupiah has fallen 7% and was the worst-performing emerging Asian currency, while the Jakarta Composite Index was down more than 27% year-to-date. The ringgit, won and Taiwan dollar rebounded, and the Philippines equity benchmark rose 1.7%. Investors were also monitoring a summit between US President Donald Trump and Chinese President Xi Jinping.
