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View all search resultsRupiah touches new low on Fed hike bets, politics
A strong US dollar and domestic political uncertainty have pushed the rupiah to a new record low, even as Indonesian stocks rose Thursday after the latest action by index provider MSCI left investors unfazed.
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Bundles of Indonesian rupiah banknotes are pictured at a currency exchange office in Jakarta on June 4, 2026, after the rupiah weakened beyond 18,000 per US dollar for the first time. (AFP/Yasuyoshi Chiba )
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strong United States dollar and domestic political uncertainty have pushed the rupiah to a new record low, even as Indonesian stocks rose on Thursday after the latest action by index provider MSCI left investors unfazed.
Readings from Bloomberg show that the rupiah at one point on Thursday touched a historic low of 18,250 per dollar, beyond the previous nadir of Rp 18,218 recorded in June.
Bank Indonesia (BI) executive Erwin Gunawan Hutapea said in a press statement on Thursday that the volatility was “mainly influenced” by increasing expectations of an interest rate hike by the US Federal Reserve at the upcoming policy meeting slated for December, likely to be followed by more hikes next year.
The anticipation of a more hawkish US monetary policy comes after inflation in the world’s largest economy came in higher than expected.
CME Group’s FedWatch Tool showed on Thursday that 90 percent of interest rate traders expect the Fed to hike its federal funds rate by 25 basis points (bps) in next month’s Federal Open Market Committee (FOMC) meeting, and about two thirds bet on another 25 bps hike in January.
This assessment pushed the dollar index, which measures the greenback’s value against six other major currencies, to its highest level since March last year, hurting global investor appetite for assets in emerging markets like Indonesia.
BI is scheduled to hold its monthly policy meeting next week, and some economists predict Indonesia’s central bank will hike its benchmark rate to curb the rupiah’s slide.
