FX.co ★ Rupiah Weakness Persists, Nears IDR 16,800

The Indonesian rupiah continued to weaken for the fifth consecutive session on Thursday, approaching IDR 16,800 per dollar, largely influenced by a strong dollar index. This movement comes as traders almost unanimously anticipate that the Federal Reserve will maintain its current interest rates at the forthcoming meeting, with a probability approaching 90%. Despite recent data indicating that Indonesia’s foreign exchange reserves reached their highest level in nine months by December 2025, there was little positive impact on the currency. Market observers are instead concentrating on Bank Indonesia's dovish outlook, even after a total reduction of 150 basis points in the interest rate between September 2024 and September 2025. Additionally, recent inflation figures have highlighted mounting cost pressures following the significant disaster in Sumatra in late November. However, since the price growth remains within the central bank’s target range, there appears to be no immediate need for monetary tightening. Externally, challenges persist as export activities, especially in key commodities like coal, have shown signs of slowing. Investors are now keenly awaiting the release of December's consumer sentiment index on Friday and next week's retail sales data for further insights.