Indonesian Rupiah weakens against US Dollar amid budget pressures
USD/IDR gains ground for the second successive day, trading around 17,660 during the Asian hours on Friday. The pair appreciates as the Indonesian Rupiah (ID) struggles with persistent fiscal concerns. As a net oil importer, Indonesia faces mounting budget pressures from elevated oil prices.
The Indonesian Rupiah (IDR) has declined against the US Dollar (USD) as the country grapples with fiscal challenges. As an oil-importing nation, Indonesia faces pressure on its budget due to rising oil prices. Despite government efforts to control volatile food prices and address annual inflation that reached 3.19% in August, the Rupiah's strength remains uncertain.
Analysts at MUFG predict that the current resilience in regional currencies and interest rates may not persist in the near term, especially if US yields remain elevated. Meanwhile, the USD is gaining ground due to expectations of a Federal Reserve (Fed) rate hike in September, with markets currently pricing in a greater than 72% probability of a 25-basis-point increase next week.
The US consumer price index report is also awaited, which could further solidify these tightening monetary expectations. On the technical side, USD/IDR trades at 17,660, with a capped bearish bias, holding below both the short- and medium-term exponential moving averages. The nine-period EMA serves as immediate resistance, while the 50-period EMA acts as a broader topside barrier that the pair has failed to reclaim.
The 14-day RSI at 40 suggests that downside pressure persists, even if the intensity of selling has eased.
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