Jakarta. Rupiah firmed on Tuesday, extending its early-month momentum as investors bet on a December rate cut by the US Federal Reserve and domestic inflation continued to cool.

The currency closed 38 points stronger against the US dollar at Rp 16,624, after briefly gaining 55 points from Monday’s finish at Rp 16,663.

Traze Andalan Futures Director Ibrahim Assuaibi said the rupiah held up well despite heavy external sentiment swings, supported mainly by rising expectations that the Fed will continue its monetary-easing cycle. The CME FedWatch Tool now assigns an 87.4 percent probability to a 25-basis-point cut this month.

Market chatter surrounding US policy leadership also helped sentiment. The rupiah strengthened as White House economic adviser Kevin Hassett is increasingly viewed as the likely successor to Jerome Powell as the next Fed Chair.

Fresh US data gave the dollar little support. The ISM manufacturing index showed the sector contracting for a ninth straight month in November, reinforcing views that the US economy is losing momentum.

Geopolitical tensions added another layer of volatility. The rupiah still managed to advance even as the Russia–Ukraine conflict intensified following a surge in Ukrainian drone strikes, and as Washington signaled it may tighten restrictions against Venezuela, including potential airspace closures.

Domestically, softer inflation provided an additional lift. The Central Statistics Agency (BPS) reported that the Consumer Price Index rose 0.17 percent month-on-month in November, easing from 0.28 percent in October. Annual inflation slowed to 2.72 percent, while year-to-date inflation stood at 2.27 percent.

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