Rupiah Weakens Amid Hawkish Fed Signals and US Economic Data

The Indonesian rupiah is expected to weaken against the US dollar in September 2026 due to hawkish signals from Federal Reserve Chair Kevin Warsh. Speaking at the Jackson Hole Symposium, Warsh noted that U.S. inflation remains above the Federal Reserve's 2 percent target, with a PCE price index of 3.7 percent over the past 12 months and 4.1 percent over the past six months.

Nafan Aji Gusta Utama, Senior Market Analyst at Mirae Asset Sekuritas Indonesia, said that the rupiah's volatility this month will also depend on upcoming U.S. economic data, particularly inflation and labor market figures, ahead of the Federal Open Market Committee (FOMC) meeting.

However, Nafan noted that pressure on the rupiah could ease if U.S. economic data point to a slowdown or if inflation declines faster than expected. This could reduce expectations of further increases in the Fed funds rate.