Indonesian Rupiah Under Pressure Amid Fiscal Concerns and Rising Oil Prices
The Indonesian Rupiah (IDR) faces renewed pressure due to intensifying concerns over Indonesia's fiscal outlook amid higher oil prices. The USD/IDR pair appreciates as it trades around 17,920 during Asian hours on Thursday, marking the second successive day of gains.
Bank Indonesia held its benchmark rate steady at 5.75% on Wednesday, matching market estimates. This marked the first policy meeting under newly appointed Governor Destry Damayanti and followed a total 100-basis-point increase across three moves in May and June when policymakers tightened policy to support the currency after it fell to record lows against the US Dollar.
The USD/IDR pair may see further upside as the US Dollar gains strength from ongoing hawkish sentiment surrounding the Federal Reserve's (Fed) policy outlook. Market expectations for a 25-basis-point Fed rate hike in October surged to nearly 69.7%, up sharply from 48.7% last week.