FX.co ★ Rupiah Advances as Dollar Eases, BI Rate Decision in Focus

The Indonesian rupiah extended its advance, trading near IDR 18,000 per dollar on Tuesday as the dollar index weakened and investors assessed the Federal Reserve’s policy outlook ahead of its October meeting. At the same time, Bank Indonesia stepped up its stabilisation efforts under President Prabowo’s directive. Governor Destry Damayanti reported that swap instruments and onshore DNDFs had together attracted approximately US$8–8.5 billion in inflows so far. The central bank began its two-day policy meeting, with markets widely expecting it to keep interest rates unchanged for a fourth consecutive month, following a total of 100bp in hikes since May. Earlier concerns over a possible MSCI downgrade of Indonesia to standalone market status next year eased after regulators suggested excluding stocks with highly concentrated ownership from key benchmarks to enhance price discovery. Even so, overall sentiment remained fragile, with elevated oil prices weighing on fiscal prospects and persistent inflation risks stemming from higher food costs linked to El Niño.