The Indonesian Rupiah declined against the US Dollar, with the USD/IDR pair trading around 17,670 during Asian hours on Friday, following two days of losses for the Dollar. This move comes as the US Dollar maintains recent gains, despite a shift in market expectations toward a less hawkish Federal Reserve monetary policy stance. Federal Reserve Governor Christopher Waller indicated a preference for holding interest rates steady at the upcoming September meeting, provided inflation data remains stable, which contrasts with the more hawkish remarks from Chairman Kevin Warsh a week earlier. As a result, the CME FedWatch tool showed the probability of a September rate hike dropping to 50.2%, down from 63.2% the previous day [1].
Market participants are now focused on the upcoming US August employment report for further guidance on the Fed's next steps. Consensus estimates project Nonfarm Payrolls (NFP) to increase by 56,000 jobs, with the national Unemployment Rate expected to remain at 4.1% [1]. According to TD Securities strategists, recent foreign exchange market moves have been influenced by a combination of official intervention and policy communication, which has pressured the Dollar and supported precious metals, while also affecting positioning in major FX futures [1].
Regionally, Bank Indonesia Governor Destry Damayanti stated that domestic inflation is well within target, but called for closer coordination among the government, central bank, business sector, and economists to support economic growth. However, optimism is tempered by concerns that El Niño weather patterns could disrupt food supplies and increase inflationary pressures in the coming months. Sentiment remains cautious ahead of next week's domestic data releases, including August foreign exchange reserves, consumer confidence, and July retail sales, which are expected to provide further insight into consumer demand and the local policy outlook [1].
From a technical perspective, USD/IDR remains below its nine-day Exponential Moving Average (EMA), maintaining a bearish near-term tone, while the 14-day Relative Strength Index (RSI) is near 34, close to oversold territory. Initial resistance is seen at the nine-day EMA around 17,740, with a daily close above this level needed to ease downside pressure [1].
CONCLUSION
The Indonesian Rupiah's decline against the US Dollar reflects ongoing market uncertainty amid shifting Federal Reserve rate expectations and regional inflation concerns. While the Fed's dovish signals have tempered rate hike odds, market participants remain cautious ahead of key US and Indonesian economic data releases. Technical indicators suggest the USD/IDR pair may be losing some downside momentum, but further direction will depend on upcoming data and policy signals.