The Indonesian rupiah hovered near IDR 17,970 per dollar on Wednesday, extending its advance for a third straight session as the US dollar stayed under pressure after the dollar index slipped to a three-week low. Softer US Treasury yields and easing crude oil prices reduced support for the greenback, bolstering emerging market currencies, including the rupiah.
Investors were focused on Bank Indonesia’s policy decision due later in the day, with markets widely expecting the central bank to keep its benchmark rate unchanged at 5.75% for a fourth consecutive month, following a cumulative 100 basis points of tightening earlier this year. Sentiment was further supported by fading worries that MSCI might reclassify Indonesia as a standalone market, after regulators rolled out measures to tackle concentrated share ownership and tighten shareholder disclosure rules.
Still, the rupiah’s gains were capped by lingering risks from elevated oil prices, which could pressure the fiscal position, and mounting inflationary concerns tied to El Niño-related increases in food costs.
