Rupiah Nears Five-Week High as Dollar Retreats from Rate Hike Expectations

The Indonesian rupiah is on track to strengthen for a fifth consecutive week as it hovers near IDR 17,650 per US dollar. The dollar's recent weakness has contributed to this trend, with traders revising down their expectations of a Federal Reserve rate hike in the coming month following dovish comments from a central bank official.

Bank Indonesia Governor Destry Damayanti emphasized that domestic inflation remains under control and called for closer cooperation among the government, central bank, businesses, and economists to support economic growth. However, market caution prevails ahead of next week's data releases, which may offer fresh clues on domestic demand and monetary policy.

The rupiah's gains have been tempered by growing concerns that El Niño could disrupt food supplies and push up prices in the coming months. Despite this, the currency has gained around 0.25% so far this week, with its current price remaining below IDR 17,700 for a second straight session.