USD/IDR climbs to near 15,400 despite the potential market intervention by Bank Indonesia

• USD/IDR rises due to risk aversion amid rising Middle-East tensions.
• The US Dollar receives support from the decreasing odds of a Fed’s bumper rate cut in November.
• Bank Indonesia might have intervened in the FX market to support the Rupiah by ensuring the balance of supply and demand.

USD/IDR extends its winning streak for the third successive day, trading around 15,400.00 during the early European hours on Thursday. The Indonesian Rupiah lost around 1% against the US Dollar (USD) as the rising geopolitical tensions have dampened the risk appetite.

The waning likelihood of an aggressive rate cut by the Federal Reserve (Fed) in November helps the US Treasury yields to continue to gain ground and support the US Dollar (USD). The CME FedWatch Tool indicates that markets are assigning a 65.9% probability to a 25 basis point rate cut by the Federal Reserve in November, while the likelihood of a 50-basis-point cut is 31.4%, down from 49.3% a week ago.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, continues to gain ground for the fourth successive session. The DXY trades around 101.80 with 2-year and 10-year yields on US bonds standing at 3.65% and 3.80%, respectively, at the time of writing.

On the IDR’s front, Bank Indonesia, the Indonesian central bank, has intervened in the forex market to support the Indonesian Rupiah by ensuring the balance of supply and demand.

On Tuesday, Indonesia’s Inflation rate fell to 1.84% in September, down from 2.12% in the previous month, reaching its lowest level since November 2021. This decline keeps inflation within the central bank’s target range of 1.5% to 3.5%.