Jakarta. Rupiah strengthened on Tuesday as investors leaned into expectations of a Federal Reserve rate cut, pushing the currency into positive territory by the afternoon session.

Bank Indonesia data showed the rupiah closing 19 points stronger against the US dollar at Rp 16,676, after briefly gaining 25 points earlier in the day. The currency improved from Monday’s close at Rp 16,695.

Futures markets are now pricing an 87 percent chance that the Fed will deliver a 25-basis-point cut at its December 10 meeting, supporting demand for emerging-market currencies.

Ibrahim Assuaibi, director at Traze Andalan Futures, said investors remained slightly cautious despite the upbeat sentiment.

“Some policymakers have recently highlighted uncertainty about the strength of the US economy, opening the door to a more gradual or delayed easing cycle,” he said on Tuesday.

The rupiah’s move also came as markets turned their attention to upcoming US labor indicators ahead of the Fed’s decision. Ibrahim expects the four-week average of ADP Employment Change and JOLTS Job Openings for September and October to draw close scrutiny.

“If the results come in weaker than expected, this could reinforce expectations for a US rate cut,” he said, noting that such momentum may influence the rupiah’s path in the coming days.

Sentiment was further shaped by developments in Eastern Europe as Ukraine signaled plans to submit a revised peace proposal to the US following talks in London with leaders from France, Germany, and the UK.