Fed Hawkish Policy Puts a Pressure on Rupiah

By Editorial Team 27/09/2022
economic downturn
Summary

Rupiah was unable to resist the stronger US dollar. On Monday, the rupiah exchange rate based on Jakarta Interbank Spot Dollar Rate (Jisdor) weakened 0.56 percent, surpassing Rp 15,119 per US dollar from Rp 15,035 a day earlier. Citing Bloomberg data at 17.30, the rupiah slumped 0.61 percent to Rp 15.129 per dollar, the steepest drop since April 2020.

The weakening exchange rate followed the US Federal Reserve's (The Fed) hawkish policy, emphasizing that it will keep raising its benchmark rate (Fed Funds Rate) through next year until inflation falls under the central bank's target of two percent. The dollar index soared to a record high in more than 20 years. The index, which reflects the exchange rate of the US dollar against major world currencies, reached 113.21, continuing its climb after the Fed's rate hike last week. The dollar index has strengthened for the fifth straight trading day.

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