Rupiah set for biggest weekly fall since May as higher US yields, stronger dollar bite
EIDO•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 as US yields rose and the dollar strengthened.
1. Rupiah under pressure
Indonesia's rupiah was set for its biggest weekly fall since late May, pressured by rising US Treasury yields, a stronger dollar and expectations that US interest rates will remain higher for longer. It weakened as much as 0.3% to 17,935 per dollar on Friday and has declined nearly 1% this week.
2. Rate hold and currency outlook
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. Analyst Lukman Leong said stronger signals prioritizing rupiah stability were needed, along with credible fiscal policy, central bank intervention and stronger foreign capital inflows.
3. Regional market moves
The rupiah has fallen 7%, the worst performance among emerging Asian currencies, as fuel subsidies have added to fiscal strains and concerns over government spending plans. The Jakarta Composite Index was down 0.6% on Friday and more than 27% year-to-date. The ringgit, won and Taiwan dollar strengthened between 0.3% and 0.7%, while investors monitored a summit between US President Donald Trump and Chinese President Xi Jinping.
