The USD to IDR exchange rate has recently reached a 30-day high near 16,678, which is 1.1% above its three-month average of 16,485. The USD is experiencing modest support following the Federal Reserve's recent decision, which has led markets to readjust their expectations about future rate cuts. Despite this, data indicating weaker-than-expected manufacturing activity has exerted some downward pressure on the USD.
Analysts note that the Fed's dovish stance, reflected by upcoming speeches from policymakers, could further impact the greenback's strength. Specific focus will be on Federal Reserve Governor Michelle Bowman's comments, which usually sway market views on interest rate trajectories.
Meanwhile, the Indonesian rupiah has faced volatility due to political instability and social unrest, particularly following the dismissal of Finance Minister Sri Mulyani Indrawati. This has raised investor concerns and contributed to the rupiah's depreciation. However, there are signs of hope, with Indonesia's Finance Minister forecasting accelerated economic growth in Q4 2025, which may lead to increased foreign capital inflows that could support the IDR.
Bank Indonesia is prepared to intervene boldly in the market to stabilize the rupiah, employing strategies such as government bond purchases and interventions in both the spot and non-deliverable forward markets. This proactive approach may provide some relief to the IDR amid ongoing political uncertainties and protests over tax issues.
Overall, while the USD may experience some tailwinds from Fed dynamics and short-term economic expectations, the IDR's outlook remains cautiously optimistic, contingent on effective central bank interventions and recovery in investor sentiment as economic growth projections improve.
