USD/IDR Hits New Highs as Hawkish Fed Sentiment Pressures Indonesian Rupiah
The USD/IDR currency pair continued its upward trend for an eighth consecutive session on Monday, trading near 17,850 during Asian hours. This rally is largely driven by market expectations of further rate hikes from the US Federal Reserve, with a 56.5% probability priced in at the October meeting.
The hawkish stance from the Fed is causing concerns for Indonesia's currency, as a stronger US dollar puts pressure on the rupiah. The Bank Indonesia (BI) is set to hold its two-day policy meeting on Tuesday, following last month's decision to keep interest rates unchanged at 5.75%.
Fed Chair Kevin Warsh emphasized that inflation remains too high and not solely driven by oil prices, highlighting the central bank's focus on tackling elevated inflation.