Rupiah set for biggest weekly fall since May as higher US yields, stronger dollar bite
EWY•Indonesia's rupiah was set for its biggest weekly decline since late May, falling nearly 1% this week and as much as 0.3% on Friday to 17,935 per dollar. Higher US Treasury yields and a stronger dollar pressured regional currencies.
1. Rupiah under pressure
The rupiah was set for its biggest weekly fall since late May, weakening as much as 0.3% on Friday to 17,935 per dollar and losing nearly 1% so far this week. It has fallen 7% among emerging Asian currencies, with fuel subsidies adding to fiscal strains and concerns about government spending plans.
2. Central bank holds rate
Bank Indonesia kept its benchmark rate at 5.75% on Wednesday, after raising it by a cumulative 100 basis points between May and June to support the rupiah. The central bank signalled it would favor market-based measures to support the currency as elevated oil prices and higher US yields apply pressure. Analyst Lukman Leong said stronger signals prioritizing rupiah stability, credible fiscal policy, central bank intervention and increased foreign capital inflows are needed for a more sustained recovery.
3. Regional markets mixed
The Jakarta Composite Index fell 0.6% on Friday and was down more than 27% year to date. The Malaysian ringgit, South Korean won and Taiwan dollar rebounded 0.3% to 0.7%, while Philippine shares rose 1.7%. Investors were also monitoring a summit between US President Donald Trump and Chinese President Xi Jinping, with no signs of breakthroughs on AI, trade and Taiwan.
