Jakarta. Rupiah strengthened further against the greenback on Tuesday as investors grew more confident that the Federal Reserve is leaning toward a rate cut in December.

The local currency closed 43 points stronger at Rp 16,656 on Tuesday afternoon, after briefly gaining 45 points from Monday’s close of Rp 16,699.

Traze Andalan Futures Director Ibrahim Assuaibi said the rupiah’s appreciation was driven by firm market expectations that the Fed will begin easing next month, supported by a steady flow of US economic data.

“Dovish comments from Federal Reserve officials have strengthened the likelihood of a 25-basis-point cut in December,” Ibrahim said in a written statement on Tuesday. He cited recent remarks from Fed Governor Christopher Waller and New York Fed President John Williams, both signaling support for easing.

“Markets now see close to an 80 percent chance of a quarter-point cut next month, up from 30 percent before their statements, according to the CME FedWatch tool,” he added. The Fed’s rate trajectory will remain a key driver for the rupiah in the weeks ahead.

Investors are also awaiting upcoming US economic releases for further clues on the Fed’s policy direction.

Separately, the rupiah found additional support after the United States and Ukraine reportedly reached a peace arrangement with Russia, with officials from Washington and Kyiv working on a comprehensive framework to end the conflict.

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