Rupiah Weakens Amid Stronger Dollar and Key Data Releases

The Indonesian rupiah has weakened against the US dollar, reversing its previous gains. The dollar index is near a two-month high due to rising oil prices and expectations of further Fed tightening and heightened geopolitical risks.

Locally, market participants are cautious ahead of key data releases this week, including August trade, September inflation, and manufacturing activity. A central bank official stated that the rupiah remains under pressure from strong foreign-exchange demand among importers and continued portfolio outflows from domestic assets.

Despite these pressures, Bank Indonesia's multi-market interventions have capped the rupiah's weakness in offshore NDFs, domestic spot, and DNDF markets. The benchmark interest rate was kept at 5.75% for a third month after cumulative 100bp hikes since May.