Jakarta. Indonesia’s rupiah weakened further against the US dollar on Tuesday, extending recent losses despite aggressive interest rate increases by the central bank aimed at stabilizing the currency.

The rupiah opened 0.09% lower at Rp 17,859 per dollar in spot trading, according to Bloomberg data, after closing at Rp 17,843 on Monday. The currency has remained under pressure even after Bank Indonesia delivered its third interest rate increase in just over a month.

Bank Central Asia and Bank Mandiri offered the greenback at around Rp 17,880, while Bank Negara Indonesia quoted a similar selling rate.

The central bank last week raised its benchmark interest rate by 25 basis points to 5.75%, bringing cumulative tightening since late May to 100 basis points. Bank Indonesia has also introduced stricter foreign-exchange regulations to curb demand for US dollars and support the rupiah.

Governor Perry Warjiyo has repeatedly said the rupiah is fundamentally undervalued and expects the currency to strengthen over time.

The central bank will lower the threshold for cash US dollar purchases to $10,000 per participant per month starting July 1, down from $25,000 previously and significantly lower than the original $100,000 limit.

Despite the monetary tightening, the rupiah continued to weaken against several regional currencies. The Indonesian currency fell about 1% against the Singapore dollar to Rp 13,987 and depreciated by roughly 1% against the Japanese yen to Rp 112. It also weakened 0.9% against the Australian dollar while posting a modest gain against the British pound.

The US dollar index rose 0.16% to 101, while the euro slipped 0.36% to $1.14.

According to BRI Danareksa Sekuritas research team, external factors continue to influence emerging-market currencies, including shifting expectations surrounding geopolitical developments in the Middle East and movements in global energy prices.

Recent diplomatic efforts between Iran and the United States, including the signing of the Islamabad Memorandum and a temporary easing of tensions around the Strait of Hormuz, contributed to a decline in oil prices. However, uncertainty remains after renewed tensions in the region and the cancellation of follow-up negotiations.

Indonesia, which relies heavily on foreign capital inflows to finance its current account and government debt markets, remains particularly sensitive to global risk sentiment and US dollar movements.

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