TEMPO.CO, Jakarta - Indonesian rupiah weakened at the close of trading today, falling 27 points or 0.15 percent to Rp17,744 per US dollar from Rp17,717 previously.
Foreign exchange observer Ibrahim Assuaibi said the rupiah’s decline was driven by expectations of higher US Federal Reserve interest rates.
“One of the Federal Reserve governors, Christopher Waller, said that if inflation expectations deviate from the target, he would not hesitate to support an interest rate hike. It is likely he would align with other officials in raising rates,” he said in an audio statement in Jakarta on Monday.
Fed Chair Kevin Warsh was also seen as potentially supporting higher rates if inflation remains elevated, even as US President Donald Trump has not called for rate cuts under current conditions. This has increased expectations that US interest rates will remain high through 2026.
Markets are also awaiting key US data releases, including first-quarter 2026 GDP, housing data, the Fed’s preferred inflation indicators, and the core personal consumption expenditures price index.
Sentiment was also influenced by optimism over a potential peace deal between the US and Iran, although disagreements remain over the Strait of Hormuz.
“We also need to remember whether this memorandum will actually be signed, because the key issue is uranium, and secondly the matter of frozen funds from the 1970s. This is quite interesting, but I personally believe the peace deal may ultimately fail,” he said.
Domestically, he said sentiment remains weighed down by concerns over budget deficits, which continue to worry markets.
“Even though oil prices have declined, it has not been enough to lift sentiment toward the rupiah. We see regional currencies strengthening, but Indonesia is weakening,” Ibrahim said.
The Jakarta Interbank Spot Dollar Rate (JISDOR) published by Bank Indonesia also weakened to Rp17,743 per US dollar from Rp17,717 previously.
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