The Indonesian Rupiah (IDR) appreciated for the second consecutive day, with the USD/IDR pair trading around 17,860 during Asian hours on Wednesday. This strengthening of the Rupiah was attributed to improved market sentiment following the release of stronger-than-expected economic data from China, Indonesia’s largest trading partner. Official data from China’s National Bureau of Statistics (NBS) showed the Manufacturing PMI returning to expansion at 50.1, in line with market forecasts and up from August’s 49.8. The NBS Non-Manufacturing PMI also rose significantly to 50.2 from 49.0, surpassing the expected 49.3. Private sector data reinforced this positive trend, with the RatingDog Manufacturing PMI climbing to 52.1 in September, beating both the previous reading of 51.5 and the consensus estimate of 51.6. The Services PMI increased to 51.6, above both the prior month’s 51.4 and the expected 51.1, indicating steady improvement across China’s economy [1].
Investor confidence in the Rupiah was further bolstered by domestic policy signals. Indonesia’s Finance Minister Suahasil Nazara assured lawmakers that the state budget was crafted with prudence and credibility, aiming to buffer the national economy against ongoing global uncertainty [1].
Despite the Rupiah’s gains, the downside for the USD/IDR pair may be limited as the US Dollar (USD) finds support from rising expectations of further Federal Reserve interest rate hikes. According to the CME FedWatch Tool, traders are pricing in nearly a 68% probability of a rate hike in October and a 95% likelihood of a 25-basis-point increase in December. Market participants are also closely watching the upcoming US Nonfarm Payrolls report, with economists forecasting an addition of 90,000 jobs in September and the unemployment rate remaining at 4.1% [1].
In the US, funding markets have remained stable despite increased Treasury bill supply. John Velis of BNY Markets noted that funding conditions have been orderly since the Federal Reserve began reserve management purchases (RMPs), even as bill issuance rose and there was a temporary pause in new RMPs over the past two months. This stability highlights the resilience of US money markets in the face of heavier T-bill issuance [1].
CONCLUSION
Stronger Chinese economic data and assurances from Indonesia’s finance minister have supported the Indonesian Rupiah, while expectations of further US rate hikes may limit further USD/IDR downside. Market attention now turns to upcoming US economic data and Federal Reserve policy signals, with overall sentiment remaining cautiously optimistic.