Rupiah may rebound as dollar index weakens after Fed holds rates

The rupiah opened weaker in Thursday morning trading in Jakarta, slipping 30 points, or 0.18 percent, to Rp 16,752 per US dollar from Rp 16,722 previously.

Rully Nova, an analyst at Bank Woori Saudara, said the rupiah still has room to strengthen as markets weigh concerns over potential US government interference with the independence of the Federal Reserve (the Fed).

“The rupiah is expected to strengthen today in the range of Rp 16,700 to Rp 16,750, supported by the continued weakening trend in the dollar index and the Fed’s decision to hold its policy rate at 3.5 percent, in line with expectations. However, the Fed’s independence remains an overhang and continues to fuel uncertainty,” Rully told Antara in Jakarta on Thursday.

Citing Anadolu, the Fed decided to keep its policy rate unchanged in the 3.5–3.75 percent range.

Fed Chair Jerome Powell said the central bank would consider cutting rates once prices ease further.

At the same time, the Fed is also facing renewed pressure as Governor Lisa Cook is set to appear in court this month over allegations by US President Donald Trump, who has accused her of mortgage fraud.

Powell argued that central bank independence is essential to modern democracies and serves as a safeguard against the politicization of monetary policy.

His remarks followed Trump’s increasingly open comments about management at the Fed, including repeated criticism of Powell and his colleagues, statements about the nomination of the next Fed chair, and his belief that the president should be consulted when decisions on interest rates are made.

“On the domestic front, rupiah gains may be limited by capital outflows in the equity market following MSCI’s downgrade of Indonesia’s investment rating,” Rully added.

Indonesianpost.com | Antara