Jakarta. Indonesia’s rupiah edged higher on Friday, supported by growing expectations that the US Federal Reserve will begin cutting interest rates as early as next week, even as investors brace for key US inflation data due later in the day.

The currency strengthened by five points to Rp16,648 per US dollar in late Wednesday trading after briefly weakening by 10 points from Tuesday’s close of Rp16,653.

Ibrahim Assuaibi, director at Traze Andalan Futures, said sentiment improved as markets increasingly price in the possibility of Fed policy easing amid signs of cooling US economic momentum.

“Investor sentiment has shifted toward expectations that the Fed may start loosening its policy as economic momentum softens,” Ibrahim said on Friday. “Any monetary easing by the Fed will be crucial for the rupiah’s trajectory.”

Fresh US labor data helped reinforce that view. Weekly jobless claims fell sharply to 191,000,the lowest since September 2022, while private payrolls earlier in the week showed employers cutting 32,000 jobs in November, pointing to weakening hiring conditions.

Market attention is now on the US Personal Consumption Expenditures (PCE) price index for September, which traders see as a key gauge of the Fed’s next policy step ahead of its meeting next week.

The rupiah also appeared resilient despite geopolitical jitters stemming from stalled US–Russia talks earlier this week, which failed to produce progress toward a Ukraine ceasefire.

Domestically, the currency drew additional support from Indonesia’s stronger foreign reserves. Bank Indonesia reported that reserves rose to $150.1 billion at the end of November, up from $149.9 billion in October.

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