Traders price in a 30.5% chance of an immediate Fed rate hike, pressuring the USD while IDR faces central bank instability.
The USD/IDR pair retreated to 18,120 in Asian trading Wednesday, reversing two days of gains as the US Dollar weakened ahead of the Federal Reserve’s policy decision. Markets are pricing a 30.5% probability of an immediate rate hike, reflecting heightened uncertainty, while a 76.6% chance of a September increase signals prolonged high borrowing costs.
The Indonesian Rupiah’s upside remains limited due to domestic pressures, including the surprise resignation of Bank Indonesia Governor Perry Warjiyo. His departure has raised concerns over the central bank’s independence, weighing on investor sentiment. Additionally, President Prabowo Subianto’s approval rating dropped to 51.1%, down sharply from 81.2% in November, further clouding the economic outlook.