Jakarta. Rupiah slipped on Monday as investors stayed cautious ahead of this week’s Federal Reserve meeting, where markets widely expect a rate cut but remain wary of hawkish surprises.

The local currency closed 47 points lower against the US dollar, finishing at Rp 16,695 after briefly touching a 55-point drop from Friday’s Rp 16,648.

Traze Andalan Futures Director Ibrahim Assuaibi said expectations for a 25-basis-point Fed rate cut had strengthened to around 85 percent, supported by recent signs of a cooling US economy, including softer labor indicators. “Lower borrowing costs could support global growth and equities,” he said in a written statement.

Still, remarks from several Fed officials have tempered optimism, signaling that a December cut is far from guaranteed.

External risks also weighed on sentiment. Peace talks between Russia and Ukraine remain sluggish, with disputes over security guarantees for Kyiv and the status of Russian-occupied territories unresolved. At the same time, geopolitical tensions in Venezuela heightened following reported attacks on vessels accused of attempting to smuggle narcotics and renewed discussions of potential military action against President Nicolas Maduro.

Domestically, the rupiah softened despite steady economic indicators. Indonesia’s manufacturing PMI stayed in expansion territory at 53.3, while inflation held at 2.7 percent heading into the year’s close.

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