Indonesian Rupiah Recovers To More Than 1-year High Against U.S. Dollar

The Indonesian rupiah strengthened against the U.S. dollar in the European session on Wednesday.

Indonesia's central bank lowered its key interest rates unexpectedly, to spur economic growth as inflation remains well within the target range amid strengthening rupiah exchange rate.

The Board of Governors of Bank Indonesia, headed by Perry Warjiyo decided to cut the seven-day reverse repo rate by 25 basis points to 6.00 percent.

This was the first reduction since February 2021. The bank was widely expected to keep its key rates unchanged today.

The bank said it will continue to monitor the room for lowering the policy rates further, considering the low inflation, the stable and strengthening rupiah and the need to boost economic growth.

Traders await the U.S. Federal Reserve's first cut to interest rates in more than four years due later in the day. There is a debate about the size of reduction after data showed U.S. retail sales unexpectedly ticked up in August in a sign of ongoing consumer resilience.

Against the U.S. dollar, the rupiah rose to more than a 1-year high of 15293.0 from a recent low of 15372.7. At yesterday's close, the rupiah was trading at 15330.0 against the greenback.

If the rupiah extends its uptrend, it is likely to find resistance around the 15000.0 area.