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Rupiah steadies as Bank Indonesia holds rates at 5.75%
USD/IDR is pressured by a weaker US dollar after softer US data and reduced odds of a September rate hike.
FXStreet reports that USD/IDR was trading around 17,870 during Wednesday’s European hours, with the pair slipping despite a modest gain the previous day. The Indonesian rupiah stayed relatively stronger after Bank Indonesia released its interest rate decision.
Bank Indonesia kept its benchmark rate unchanged at 5.75% for a third straight August meeting, aligning with market expectations. The decision came after former governor Perry Warjiyo resigned in the prior month and Senior Deputy Governor Destry Damayanti was appointed interim chief, a shift that has raised concerns about the central bank’s independence.
The article links USD/IDR weakness to a softer US dollar, citing easing expectations for a US interest rate hike next month. It also points to US retail sales falling in July for the first time in nine months, alongside concerns after unexpected job losses and tame CPI inflation figures.
FXStreet adds that Fed expectations have shifted, with CME FedWatch placing a 32.8% chance of a rate hike at the Fed’s September meeting, down from 51.2% a month earlier. It notes that softer US housing and industrial data led the Atlanta Fed to trim its Q3 GDPNow estimate, helping Treasury yields retreat from recent peaks and contributing to a calmer dollar tone, according to analysts at Deutsche Bank.