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Rupiah Slides for 5th Session Ahead of Fed Decision

The Indonesian rupiah slipped past IDR 17,700 per U.S. dollar on Wednesday, extending its losing streak to five sessions as the dollar index hit a one-month high ahead of the Fed’s policy decision. Markets widely expect the U.S. central bank to deliver its first rate hike in around three years, keeping the greenback supported and weighing on emerging-market currencies. Locally, headwinds persisted, with factory activity still weak in August, fragile household sentiment, and retail sales growth slowing. External risks also intensified as crude oil rose above US$100 per barrel amid mounting Middle East tensions, while elevated global yields and cautious foreign investor mood added pressure on Indonesian assets. These developments could complicate inflation and fiscal management for new Finance Minister Suahasil Nazara. Bank Indonesia will hold a policy meeting next week after leaving its key rate unchanged for a second month in August, following cumulative tightening of 100bp since May.

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