Jakarta. Rupiah extended its decline on Monday, closing weaker as cautious remarks from the US Federal Reserve dampened investor optimism and bolstered the dollar’s strength.

The local currency fell 45 points to Rp 16,676 per US dollar, slipping further from Friday’s close of Rp 16,631. The rupiah briefly weakened to 50 points before trimming some losses by the session’s end.

Market sentiment turned sour after Fed Chair Jerome Powell signaled that further rate cuts were “not a certainty,” despite last week’s 25-basis-point reduction. The remarks pushed the greenback to hover near a three-month high on Monday.

“Powell’s cautious tone, echoed by other Fed officials, has prompted markets to scale back expectations for another rate cut in December,” said Ibrahim Assuaibi, Director of Traze Andalan Futures. “That sentiment has kept the US dollar firm and pressured the rupiah.”

The Indonesian currency also faced headwinds from the ongoing US government shutdown, now entering its fifth week with no breakthrough after the Senate adjourned last Thursday. The stalemate has delayed the release of key economic data and sparked broader concerns over the US economy.

“This situation continues to strengthen the dollar and could push the rupiah to around Rp 16,800–16,900,” Ibrahim added.

External pressures were further fueled by renewed geopolitical risks, after Ukraine attacked one of Russia’s key oil ports in the Black Sea, raising fears of supply disruptions. Meanwhile, last week’s meeting between US President Donald Trump and Chinese President Xi Jinping in Busan offered limited relief, with both leaders merely pledging to ease trade barriers.

On the domestic front, upbeat manufacturing data failed to support the rupiah. Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) climbed to 51.2 in October from 50.4 a month earlier, marking three straight months of expansion.