Indonesian Rupiah Declines as US Dollar Gains Momentum

The Indonesian Rupiah has declined despite higher August inflation, which rose to 3.19% from 2.88% in July.

This increase topped market expectations of 3.13%, but remained within Bank Indonesia's target range of 1.5%-3.5%. Core inflation reached its highest level since March 2023 at 2.92%, beating the anticipated 2.8%

The US Dollar, on the other hand, has gained strength due to hawkish sentiment surrounding the Federal Reserve and rising September rate hike bets.

Strategists at OCBC Group Research describe the recent adjustment to their currency projections as a 'reset, not reversal', noting that they have updated forecasts after the earlier USD sell-off but still expect moderate USD strength into early 2027.