Indonesian Rupiah Struggles Amid Hawkish Fed Signals and Portfolio Outflows
The Indonesian Rupiah (IDR) is under pressure due to robust foreign-exchange demand among importers and ongoing portfolio outflows from domestic assets, according to a central bank official.
This has led to the USD/IDR cross appreciating, trading around 17,980 during Asian hours on Monday. The US Dollar (USD) receives support from hawkish signals from Federal Reserve (Fed) officials, with Cleveland Fed President Beth Hammack warning against allowing elevated prices as the norm.
Philadelphia Fed President Anna Paulson echoed this sentiment, stating that modest further tightening may be warranted. As a result, CME FedWatch Tool suggests that money markets are now pricing in a 65.9% chance of a benchmark rate hike at the October Fed meeting, up from 57.6% a week ago and just 9.4% a month ago.