Ahead of a Federal Open Market Committee (FOMC) meeting, the rupiah strengthened on Wednesday to Rp 14,380 per United States dollar, sitting 0.91 percent stronger than its position on Tuesday, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).

Futures firm Monex Investindo Futures analyst Putu Agus Pransuamitra said the rupiah appreciation was caused by a weakening US dollar index sparked by speculation that the Federal Reserve might take a dovish position during the meeting.

“The banking sector, analysts and market players also project that the Fed will only hike its reference rate twice next year. It puts the US dollar under pressure ahead of the FOMC meeting,” Putu said as quoted by kontan.co.id on Wednesday.

He said the decline of crude oil prices had also created positive sentiments for the Indonesian currency because it would help ease the burden of the country’s imports and narrow the trade balance.

Putu had estimated that the rupiah exchange rate would be between Rp 14,325 and Rp 14,435 per US dollar on Wednesday.

The Federal Reserve is expected to announce its decision on Wednesday in the United States or early Thursday in Indonesia. (bbn)