The Indonesian rupiah traded around IDR 17,750 per U.S. dollar on Wednesday, holding near the previous session’s level as investors awaited Bank Indonesia’s interest rate decision on Thursday. The central bank began its two-day policy meeting today and is widely expected to retain its tightening bias, having raised rates by a cumulative 75 bps since May.
While a tighter policy stance should help anchor inflation expectations and lend support to the rupiah, higher borrowing costs could gradually weigh on domestic demand. On the fiscal side, local media reported that the government has cut the budget for its flagship Free Meal Program by an estimated IDR 67 trillion, as President Prabowo pursues broader spending efficiencies. Authorities in Jakarta also reiterated that prices for subsidized fuel and LPG will remain unchanged.
On the global front, the U.S. dollar index was little changed as markets looked ahead to the Federal Reserve’s policy decision, where interest rates are widely expected to be kept on hold at the first meeting chaired by Kevin Warsh.
