Rupiah set for biggest weekly fall since May as higher US yields, stronger dollar bite
SINGAPORE: Indonesia's rupiah was set for its biggest weekly fall since late May on Friday, pressured by rising US Treasury yields, a stronger dollar and expectations that US interest rates will remain higher for longer.
Indonesia's rupiah is on track for its largest weekly decline since late May, as a result of higher US yields, a strengthening dollar, and expectations that US interest rates will stay elevated for longer. The currency slipped as much as 0.3% to 17,935 per dollar on Friday, eroding nearly 1% this week. Bank Indonesia held its key interest rate steady at 5.75% on Wednesday, after increasing it by a total of 100 basis points from May to June to shore up the weakening rupiah.
The central bank opted for market-based measures over direct support, citing high oil prices and rising US yields as pressure on the currency. Market participants are awaiting more decisive signals from the Bank of Indonesia (BI) to demonstrate a commitment to rupiah stability, according to Lukman Leong, chief analyst at Doo Financial Futures.
The rupiah has lagged behind other emerging Asian currencies, slipping 7% amid fiscal strains from fuel subsidies and uncertainty over the government's spending plans. Leong also emphasized the need for stronger fiscal policies, central bank intervention, and increased foreign capital inflows to facilitate a more robust recovery for the rupiah.
Regional currencies, such as the Thai baht and Indian rupee, traded flat, while the broader market sentiment remained cautious due to a surge in 30-year US Treasury yields and a stronger dollar.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
