Rupiah Strengthens as Markets Anticipate Fed Policy Easing

RRI.CO.ID, Jakarta - The Indonesian Rupiah strengthened in Wednesday morning trade, January 28, 2026, gaining 36 points or 0.21 percent to open at IDR 16,732 per US dollar, up from IDR 16,768 previously. 

The currency’s upward momentum is being driven by growing market conviction that the U.S. Federal Reserve is moving toward a more accommodative monetary stance.

Bank Woori Saudara analyst Rully Nova said the Rupiah’s appreciation was influenced by expectations that the Fed will adopt a looser policy. “The Rupiah is expected to strengthen in today’s trading range of IDR 16,710–16,770, supported by the weakening global dollar index ahead of the Fed meeting. Although the Fed is not expected to change its benchmark rate, its future policy direction is certain to be loose,” Rully said in Jakarta on Wednesday, as quoted by Antara.

According to Anadolu, the Federal Reserve is expected to keep its benchmark rate at 3.5–3.75 percent at its first meeting of 2026. Previously, the Fed cut interest rates by a total of 75 basis points in September, October, and December 2025. The decision came amid mounting political pressure and ongoing legal disputes involving the central bank.

U.S. President Donald Trump has repeatedly urged the Fed to lower interest rates. The administration is currently investigating alleged criminal conduct by Fed Chair Jerome Powell, part of Trump’s efforts to pressure the central bank chief to cut rates further.

Additional sentiment supporting the Rupiah stems from uncertainty over U.S. tariff policies. Trump has threatened to impose a 100 percent tariff on Canadian exports and raise South Korean automotive duties to 25 percent from 15 percent. “Uncertainty has led market players to sell off the dollar,” Rully said, noting that unclear trade relations have prompted investors to exit the greenback, indirectly benefiting emerging market currencies such as the Rupiah.

Domestically, Bank Indonesia (BI) continues to provide strong support for Rupiah stability. Minister Perry Warjiyo, Governor of BI, expressed optimism about the currency’s fundamental strength, citing low inflation, improving economic growth, attractive investment yields, and BI’s commitment to stabilizing the Rupiah.

He explained that current volatility is largely driven by short-term factors, including “volatile food” inflation caused by extreme weather and natural disasters disrupting food distribution. 

To maintain stability, BI has cut its benchmark BI-Rate five times since September 2024, bringing it down to 4.75 percent, while keeping the door open for further reductions.

Minister Perry said BI is also intervening in offshore Non-Deliverable Forward (NDF) markets in Asia, Europe, and the U.S., while reinforcing onshore defenses through direct intervention in the spot market and the Domestic Non-Deliverable Forward (DNDF) market. 

These measures are aimed at ensuring liquidity, transparent price discovery, and resilience against global shocks.

With the Fed expected to maintain a dovish stance and BI continuing its pro-stability measures, the Rupiah appears well-positioned ahead of the upcoming Federal Open Market Committee (FOMC) announcement. ***