Indonesian Rupiah holds losses as Foreign Reserves slip in September
- Indonesian Rupiah remains under pressure against the US Dollar following a minor drop in September foreign reserves.
- Indonesia’s Foreign Reserves fell slightly to $146.3 billion in September, dipping from August's five-month high.
- Bank Indonesia confirmed reserves cover 5.3 months of imports, remaining well above international adequacy standards.
USD/IDR pares its recent losses from the previous day, trading around 17,900 during European hours on Wednesday. The Indonesian Rupiah remains subdued against the US Dollar (USD) following the release of Indonesia's latest Foreign Reserves data. Reserve assets fell slightly to USD 146.3 billion in September 2026, dipping from a five-month high of USD 146.5 billion recorded in August.
Despite the marginal decline, Indonesia’s reserve assets position at the end of September was equivalent to 5.3 months of imports, or 5.2 months of imports and government external debt servicing. This remains well above the international adequacy benchmark of approximately three months of imports. Bank Indonesia stated that the current reserve level is sufficient to bolster external sector resilience and ensure macroeconomic and financial stability.
The USD/IDR pair appreciates as the US Dollar advances amid higher crude oil prices, driven by persistent Middle East supply risks, keeping inflationary concerns and rate-hike expectations firmly in focus.
However, the upside of the Greenback could be restrained as last week's softer US labor market data weaken expectations for further Federal Reserve tightening. According to the CME FedWatch tool, interest-rate swaps reflect roughly a 20% probability of a rate hike at the Fed's upcoming October meeting.
Technical Analysis:
In the daily chart, USD/IDR trades at 17,900, holding just above the 50-day Exponential Moving Average (EMA) while remaining capped by the short-term nine-day EMA . This configuration hints at a mildly constructive bias, with price attempting to build a floor over the medium-term trend but lacking a clean breakout in the near term. The 14-day Relative Strength Index (RSI) at 52.81 sits slightly above neutral, suggesting steady but not aggressive buying interest, while the FXS Fed Sentiment Index at 137.91 points to a calmer Fed-related backdrop compared with recent peaks, limiting directional conviction.
On the topside, immediate resistance is located at the nine-day EMA near 17,912.81, and a daily close above this hurdle would open the way for a more decisive push higher. On the downside, initial support aligns with the latest close around 17,903.20, with firmer underlying demand seen at the 50-day EMA at 17,851.51; a break back below this latter level would weaken the nascent bullish tone and expose deeper retracements in the short term.
Fed’s Schmid flags AI-driven price pressures, keeps Dollar bulls focused on short-rate path
Fed’s Schmid delivers a slightly more hawkish tone, with an 8/10 FXS Speechtracker score standing above the 7.5/10 historical average, underscoring a firmer commitment to the inflation fight relative to the established baseline. The emphasis that inflation is “frustrating,” that the Fed’s credibility is at stake, and that “AI is now one of the largest drivers of inflation” signals concern about persistent and possibly structural price pressures, even as the labor force is described as “in a good place.” The remark that the Fed still has work to do on the short rate despite higher long-term yields reinforces a bias toward keeping policy restrictive, a backdrop typically supportive for the Dollar.
The FXS Fed Sentiment Index rose by 0.34 points to 137.91, confirming a modest hawkish shift that aligns with the above-baseline speech score in the FXS Speechtracker. With the FXS Fed Sentiment Index firmly above the 100 neutral mark, the Fed remains clearly in hawkish territory, suggesting ongoing upside risk for the Dollar as markets price in a prolonged period of elevated short rates.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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