2025.12.2405:58:44UTC+00Rupiah Slips Despite Softer Dollar

The Indonesian rupiah declined towards IDR 16,760 per dollar on Wednesday, following a brief strengthening to around 16,700 in the previous session, largely due to subdued trading activity during the holiday period. Market sentiment was negatively influenced by Bank Indonesia's dovish policy approach, despite the central bank maintaining its benchmark rate at 4.75% for the third consecutive meeting in mid-December, following a cumulative reduction of 150 basis points from September 2024 to September 2025. Governor Perry Warjiyo emphasized that there remains potential for further rate cuts, pointing to the backdrop of mild inflation and the imperative to underpin economic growth, particularly in the aftermath of the late-November disaster in Sumatra. As of this year, the rupiah has been one of the weakest currencies in Asia, having depreciated by about 4.2%. However, the depreciation has been partly checked by anticipation of Indonesia and the United States entering a reciprocal tariff agreement by late January, to be ratified by Presidents Prabowo Subianto and Donald Trump. On the global stage, the dollar index fell to nearly a 12-week low of around 97.7, as market participants factored in potential interest rate cuts by the Federal Reserve next year against a backdrop of easing inflation and a softening labor market.