Jakarta. Rupiah weakened against the US dollar on Thursday, extending its losses as markets reacted to the Federal Reserve’s latest interest rate hike and continued geopolitical tensions in the Middle East.

The rupiah closed down 57 points, or 0.32%, at Rp 17,753 per US dollar on Thursday, compared with its previous close of Rp 17,696.

Ibrahim Assuaibi, currency analyst and director of Traze Andalan Futures, said the rupiah continued to weaken following the Federal Reserve’s decision on Wednesday to raise its benchmark interest rate to a range of 3.75% to 4.0%.

“This is the first interest rate hike by the US central bank since July 2023,” Ibrahim said in a statement on Thursday.

The Fed’s decision drew a contrasting response from US President Donald Trump, who urged the central bank to lower interest rates to 1% or below.

The rupiah also faced pressure from ongoing tensions involving the United States, Iran and Houthi militants in the Middle East.

“The market responded positively to talks between the US and the Houthi group, which helped ease concerns about potential disruptions to supplies in the Middle East,” Ibrahim said.

On Wednesday evening, Trump reiterated his claim that Iran was seeking a peace deal and said the United States was “expected to be nearing the end” of the conflict.

However, Washington and Tehran remain at odds over the Strait of Hormuz, with shipping activity through the strategic waterway still far below prewar levels.

Domestically, the rupiah remained under pressure following the change in finance minister earlier this week, with Suahasil Nazara replacing Purbaya Yudhi Sadewa.

Suahasil has reaffirmed his commitment to maintaining the country's fiscal health and ensuring the state budget, known as the APBN, continues to support economic growth while managing and maintaining Indonesia's economic stability.

As of 3:59 p.m. Jakarta time, the Singapore dollar stood at Rp 13,910, the Japanese yen at Rp 114.01, the Australian dollar at Rp 12,627 and the euro at Rp 20,373, according to Bloomberg data.

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