Rupiah Surges as Easing Inflation Data Cools Rate Hike Expectations
The Indonesian rupiah has strengthened against the US dollar after softer US inflation data reduced market expectations for an October interest rate hike by the Federal Reserve.
The rupiah appreciated by 84 points, or 0.47 percent, to settle at Rp17,882 per US dollar on Friday, compared to its previous close of Rp17,966.
Currency analyst Ibrahim Assuabi attributed the rupiah's momentum to a structural recalibration of Federal Reserve policy expectations, with lower inflation data reducing the probability of another interest rate hike this month to 26 percent from 69 percent just last week.
The shift in market pricing follows the release of the US Personal Consumption Expenditures (PCE) price index, which rose by 3.0 percent year-on-year in August, below the consensus forecast of 3.3 percent and a deceleration from the 3.3 percent recorded in July.