Rupiah Shows Weekly Weakness Amid Rate Cut Expectations

Currency Performance Analysis

The Indonesian rupiah closed at Rp16,707 per USD on Friday, representing a 0.13% daily gain but a 0.10% weekly decline from its previous week's close of Rp16,690 per USD. The Jisdor rate, which is determined by Bank Indonesia, also showed a similar trend, gaining 0.13% daily but losing 0.03% weekly to settle at Rp16,710 per USD.

Market Drivers and Analyst Insights

Lukman Leong, currency analyst at Doo Financial Futures, noted that the rupiah's weekly weakness was primarily driven by market expectations of a potential BI rate cut. The anticipation of monetary easing by Bank Indonesia put pressure on the currency throughout the week. However, positive sentiment in the equity markets, fueled by hopes of an end to the US government shutdown, provided some support to the rupiah, limiting its downside.

Technical and Fundamental Outlook

The currency's performance this week highlights the complex interplay between domestic monetary policy expectations and global risk sentiment. While the prospect of lower interest rates in Indonesia poses challenges for the rupiah, improved risk appetite in global markets has helped mitigate some of the losses. Looking ahead, market participants will be closely watching Bank Indonesia's monetary policy decisions and any further developments regarding global economic conditions.