Jakarta. Rupiah is expected to weaken further against the US dollar on Wednesday as elevated oil prices amid geopolitical tensions and expectations of further US monetary tightening continue to weigh on the Indonesian currency.

Rupiah closed 3 points, or 0.02%, lower at Rp 17,981 per US dollar on Tuesday, compared with Rp 17,978 in the previous session, after recovering from an earlier decline.

The currency had weakened by as much as 33 points, or 0.18%, to Rp 18,011 per dollar before rebounding toward the Rp 17,900 level.

“The rupiah is expected to fluctuate but weaken within the range of Rp 17,980 to Rp 18,030 per US dollar in Wednesday’s trading,” Ibrahim Assuaibi, director of Traze Andalan Futures, said in a written statement on Tuesday.

Ibrahim said the rupiah remained under pressure from geopolitical tensions that have kept global oil prices elevated.

High oil prices have raised concerns about Indonesia’s fiscal balance, while also prompting markets to factor in the possibility of further monetary tightening by the US Federal Reserve following its 25-basis-point rate increase at its Sept. 15-16 meeting.

“Comments from Fed officials will also be closely monitored for clues about the central bank’s next policy moves,” Ibrahim said.

CME FedWatch data showed that markets were pricing in a 70% chance of another rate hike at the Fed’s October meeting, following a series of hawkish remarks from US central bank officials last week.

Meanwhile, Bloomberg data as of 3:59 p.m. Jakarta time on Tuesday showed the rupiah trading at Rp 14,059 per Singapore dollar, Rp 114.26 per Japanese yen, Rp 12,571 per Australian dollar and Rp 20,401 per euro.

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