Indonesian Rupiah Weakens Amid Budget Pressures and Rising Inflation

The Indonesian Rupiah (ID) has weakened against the US Dollar (USD), trading at around 17,660 during Asian hours on Friday. This decline comes amid persistent fiscal concerns for Indonesia, a net oil importer facing mounting budget pressures from elevated oil prices.

Domestic price pressures remain a challenge despite government efforts to curb food-price volatility. Annual inflation accelerated to 3.19% in August, adding to the country's economic woes.

The US Dollar is gaining ground due to expectations of a Federal Reserve (Fed) rate hike in September. Markets are pricing in a greater than 72% probability of a 25-basis-point rate increase next week, up from a 61% chance prior to the latest Producer Price Index data release.