Indonesian Rupiah weakens as domestic protests, inflation risks loom
USD/IDR gains ground for the third successive day, trading around 17,800 during the Asian hours on Thursday. The currency pair is under downward pressure as the Indonesian Rupiah (IDR) struggles against fragile domestic sentiment.
The Indonesian Rupiah weakened over three consecutive days, trading around 17,800 against the US Dollar. Domestic protests in Jakarta and concerns over potential unrest caused investors to hesitate, while markets prepared for next week's August inflation report. This report could see price hikes, especially in food due to El Niño weather risks.
External pressures and uncertainty in global energy markets added to these worries. However, comments from central bank nominee Destry Damayanti about promoting policy coordination to preserve independence reassured markets. Despite the challenges, the USD strengthened, supported by solid economic data from the US. Data showed a 0.2% increase in the PCE price index and a 3.7% increase in the annual rate.
The Fed's potential final rate hike before year-end further bolstered the USD. Oil prices dropped following diplomatic progress in the Middle East, easing inflation concerns, while fiscal concerns grew over the US Treasury's plan to double bond buybacks, criticized by billionaire investor Stanley Druckenmiller as detrimental to market credibility.
Analysts noted that the USD's technical foundation was fragile, predicting bear pressure could push the DXY below 98.75.
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