FX.co ★ Dollar Strength Weighs on Rupiah, BI Keeps Easing in View

The Indonesian rupiah remained around IDR 16,870 per dollar on Wednesday, following a brief strengthening to 16,835 in the previous session, maintaining proximity to its multi-month lows. The sustained pressure is attributed to the U.S. dollar index nearing its peak since early December, driven by inflation data that has bolstered expectations for the Federal Reserve to keep interest rates steady at its forthcoming meeting. Within Indonesia, Bank Indonesia is gearing up for its first policy meeting of the year later this month, with potential for further easing still on the table. Authorities have indicated their willingness to bolster economic growth, especially as disaster recovery efforts in Sumatra put a strain on fiscal resources. From September 2024 to September 2025, the central bank implemented a cumulative rate cut of 150 basis points, facilitated by stable inflation levels. Meanwhile, recent reports highlighted an increase in retail activity for November, spurred by seasonal consumption, although consumer sentiment remains fragile. Additionally, external challenges persist, as a decline in exports highlights weaker demand from major trading partners, particularly China and Japan.