The Indonesian rupiah strengthened 0.25% to Rp17,705 per US dollar at the opening of trading on 3 September 2026, while the US dollar index declined 0.08% to 99.502. The move reversed losses from the previous session, when the rupiah had depreciated 0.31% to close at Rp17,765 per dollar on 2 September.
Fed rate bets shift higher
Market expectations for a Federal Reserve rate increase in September have risen sharply to 68%, up from about 40% the previous week, according to CME FedWatch. The US 10-year government bond yield reached 4.8182%, its highest level since November 2023. These developments underscore the divergence between the Federal Reserve, which may continue tightening, and the European Central Bank, which is expected to be nearing the end of its rate-hiking cycle.
At 1.1598 US dollars per euro, the currency pair reflected the widening gap in monetary policy paths between the two central banks.
Bank of Indonesia weighs global pressures
Destry Damayanti, Governor of Bank of Indonesia for the 2026–2031 term, said the central bank faces a “higher for longer situation” characterised by high bond yields, elevated inflation in developed countries, and rates that remain high. She was sworn in at the Supreme Court in Jakarta on 2 September. These global factors will greatly influence the Bank of Indonesia’s future domestic policy decisions, she said.
Damayanti stressed that high global uncertainty means stability remains the main focus of the Bank of Indonesia, especially in maintaining the rupiah exchange rate, inflation, and the financial system as the foundation of economic growth.
Data: Swissquote
