Back to the Blog Main Page
26/06/26
46
USD/IDR Holds Near 18,000 as Dollar Strength and Fed Hike Bets Support Gains
USD/IDR edged lower after opening with a bullish gap, but the pair remained in positive territory and traded near 18,000 during Asian hours on Friday. The rupiah’s weakness was supported by renewed strength in the US Dollar, which has been benefiting from rising expectations that the Federal Reserve may raise interest rates again later this year.
Market pricing now implies a 63.4% probability of a Fed hike at the September 15–16 policy meeting, according to the CME FedWatch tool. That shift reflects a more hawkish outlook after US inflation data accelerated in May. The headline Personal Consumption Expenditures index rose 4.1% from a year earlier, up from 3.3% in April, marking the first move above 4% in three years. The increase was largely linked to higher energy costs, which have been influenced by tensions in the Middle East and have kept the prospect of additional tightening in focus.
The core PCE measure, which strips out food and energy, also edged higher to 3.4% year over year from 3.3%. That was the strongest annual reading since October 2023 and reinforced the view that underlying inflation remains sticky despite previous policy restraint.
Attention is now turning to Indonesia’s June inflation figures due next week. Investors are watching food prices closely after El Niño-related supply disruptions pushed annual inflation to its fastest pace in seven months in May. That trend has raised concerns that domestic price pressures may persist in the near term.
Even so, the rupiah has been partly protected by strong foreign inflows. International investors bought around IDR 105 trillion of Bank Indonesia’s one-year securities and government bonds during June, helping absorb broader market weakness and support local assets.
Promotions
