Rupiah Hits Rp 18,111 as Fed Split, BI Leadership Uncertainty Weigh
Jakarta. Rupiah weakened past the Rp 18,100 mark against the US dollar on Thursday as escalating geopolitical tensions in the Middle East, a divided Federal Reserve, and uncertainty over Bank Indonesia's leadership continued to weigh on investor sentiment.
The rupiah closed down 38 points, or 0.21%, at Rp 18,111 per US dollar, compared with Wednesday's close of Rp 18,073.
Ibrahim Assuaibi, director of Traze Andalan Futures, said the currency came under renewed pressure as global investors reacted to fresh tensions between the United States and Iran.
"The rupiah weakened after external sentiment resurfaced over the US-Iran conflict in the Middle East. Most recently, President Donald Trump said the US military would strike Iran following Tuesday's Iranian missile attack on a US base in Jordan," Ibrahim said in a statement on Thursday.
The rupiah was also pressured by the Federal Reserve's latest policy decision. On Wednesday, the US central bank left the federal funds rate unchanged at 3.50%-3.75%, but the decision was split 9-3, with three members of the Federal Open Market Committee voting for a 25-basis-point rate hike.
"Although the Fed kept rates unchanged, the 9-3 split highlighted growing differences among policymakers, with three FOMC members favoring a 25-basis-point increase," Ibrahim said.
Domestically, the rupiah remained under pressure as investors monitored uncertainty surrounding the succession of Bank Indonesia's leadership following Perry Warjiyo's resignation.
Market participants are also awaiting Indonesia's second-quarter economic growth data, with economists forecasting expansion of 4.8%-4.9%, slowing from 5.61% in the first quarter. Full-year growth is projected at 4.9%-5.1%, below the government's 5.4% target.
Other exchange rates against the rupiah stood at Rp 14,018 per Singapore dollar, Rp 110.67 per Japanese yen, Rp 12,604 per Australian dollar, and Rp 20,725 per euro.
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