Jakarta. Rupiah extended its losses against the US dollar on Wednesday as investors turned cautious ahead of the Federal Reserve’s interest rate decision, with markets closely watching the policy direction under new Fed Chair Kevin Warsh.

Bloomberg data showed the rupiah weakened 23 points, or 0.13%, to Rp 17,748 per US dollar in spot trading. The currency had opened 11 points lower, or 0.06%, at Rp 17,736 per dollar. Meanwhile, the US Dollar Index edged down 0.03% to 99.509.

Rully Nova, an analyst at Bank Woori Saudara, said global factors continued to drive the rupiah’s movement, particularly expectations surrounding the Fed’s policy announcement later on Wednesday.

“Rupiah is expected to trade in the range of Rp 17,720 to Rp 17,800 per US dollar today. The main factor is market anticipation ahead of the Fed’s interest rate decision tonight,” Rully said in Jakarta.

On the domestic front, investors are also monitoring Bank Indonesia’s monetary policy outlook after the central bank raised its benchmark BI Rate to 5.5% last week.

Rully expects Bank Indonesia to keep its policy rate unchanged at Thursday’s Board of Governors Meeting despite easing geopolitical tensions and continued room for the rupiah to strengthen.

“Bank Indonesia is expected to hold its benchmark rate at tomorrow’s meeting. At the same time, easing geopolitical pressures and the rupiah’s positive outlook should help support exchange rate stability,” he said.

He added that the government’s efforts to maintain fiscal discipline have also been viewed positively by the market, including its ongoing review of funding for the free nutritious meals program.

Rully said that the rupiah could regain ground later this week if the Fed acknowledges easing short-term inflationary pressures following lower oil prices amid de-escalating geopolitical tensions.

He also said the resilience of the US economy could give the Fed room to deliver one rate cut this year.

“The rupiah still has room to strengthen in the coming sessions and throughout the week if the Fed takes into account the recent moderation in inflation and signals the possibility of one rate cut this year,” Rully said.

Elsewhere in the region, the Singapore dollar traded at Rp 13,849, the Japanese yen at Rp 110.8, the Australian dollar at Rp 12,540, and the euro at Rp 20,618.