Indonesian Rupiah weakens amid domestic political instability, stable US Dollar
USD/IDR gains ground after registering modest losses the previous day, trading around 18,140 during Asian hours on Wednesday. The currency pair advanced as the Indonesian Rupiah (IDR) came under pressure from heightened market caution following political instability in the country.
The Indonesian Rupiah weakened amid domestic political instability, while the US Dollar remained stable. On Wednesday, the USD/IDR pair rose to around 18,140 during Asian trading hours as the Indonesian currency faced pressure from heightened market caution following political turmoil. Vice President Gibran Rakabuming Raka met with President Prabowo Subianto and stated his intention to resign, following two court rulings invalidating his educational credentials.
This raised doubts about his eligibility for office and triggered calls for parliamentary impeachment. Meanwhile, the US Dollar gained support from rising Federal Reserve rate hike odds in December, with markets pricing a 91% chance of an increase next month. The US Consumer Price Index rose 0.4% month-over-month in October, exceeding forecasts, and Core CPI matched September's pace.
The Dollar is expected to remain supported due to reassessed expectations of a more hawkish Fed, while Indonesia's currency is sensitive to global market conditions, domestic economic fundamentals, commodity prices, and central bank interventions. Bank Indonesia plays a crucial role in stabilizing the Rupiah through monetary policy adjustments and market operations.
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