Rupiah Weakens as BI Holds Rate, Fed Expectations Lift Dollar

The Indonesian Rupiah (IDR) weakened against the US Dollar (USD) for the second consecutive day, trading near 17,920 in Asian hours on Thursday.

Bank Indonesia kept its benchmark interest rate unchanged at 5.75% after hiking rates by a cumulative 100 basis points in May and June.

The move reinforced expectations of a hawkish Federal Reserve stance, with market-implied odds of a 25-basis-point rate hike in October climbing to 69.7%, up from 48.7% the previous week.

Strategists at Scotiabank noted that momentum remains with the USD, citing broad gains against major currencies and pushing the Dollar Index to its highest since late July.