The Indonesian rupiah traded near IDR 17,850 per U.S. dollar on Wednesday, little changed from the previous session, as traders awaited the central bank’s interest rate decision later in the day. Policymakers are widely expected to raise the benchmark rate by 25bps, following cumulative 75bps of tightening since May, to support the rupiah and reinforce inflation expectations. While tighter monetary policy should help stabilise the local currency, higher borrowing costs could further weigh on domestic demand. Investors also weighed local reports of a new stimulus package for lower-middle-income households, alongside unchanged subsidized fuel and LPG prices. Jakarta, meanwhile, has cut funding for the flagship Free Meal Program by about IDR 67 trillion as President Prabowo pursues fiscal efficiency. Externally, the dollar stayed firm after the Fed held rates but flagged growing support for hikes later this year, curbing gains across emerging-market currencies, including the rupiah.
