Jakarta, CNBC Indonesia – The rupiah currency is one of the strongest against the United States (US) dollar compared to other Asian currencies. Trading on just three days a week, the rupiah was recorded to have strengthened 0.25% to IDR 16,040 against the US dollar.

Meanwhile, Indonesia's neighboring currencies, namely the baht, ringgit and Singapore dollar, tend to be stable.

The Thai Baht was flat throughout the week at 36.72 per US dollar. Meanwhile, the Malaysian ringgit strengthened slightly by 0.02% to 4.74 per US dollar and the Singapore dollar 1.35 per US dollar.

The Japanese yen and Korean won even weakened sharply against the US dollar. respectively weakened 1.79% to 155.72 per US dollar and 1.11% to 1,369.65 per US dollar.

Meanwhile, the Chinese yuan strengthened 0.19% to 7.23 per US dollar.

The weakening of most Asian currencies was due to the strengthening of the dollar following a reading on US consumer sentiment as investors sort through a raft of comments from Federal Reserve officials, with focus starting to shift to next week's key inflation reading.

Next week, investors will pay close attention to inflation readings in the form of the consumer price index (CPI) and producer price index (PPI), as well as retail sales data.

“The CPI, I don't think, will change people's views; price pressures are still high, but they will decline, the numbers will be weaker year-on-year,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

“So what is important is not the magnitude, but the direction.”

Also supporting the dollar were comments from Dallas Federal Reserve President Lorie Logan, who said it was unclear whether monetary policy was tight enough to bring inflation down to the US central bank's target of 2%, and that it was too early to cut interest rates.

This contradicts previous comments from Atlanta Federal Reserve President Raphael Bostic, who said the Fed likely remains on track to lower interest rates this year although the timing and extent of policy easing remains uncertain. Additionally, Chicago Federal Reserve President Austan Goolsbee said he believes U.S. monetary policy is “relatively restrictive.”

The comments cap a week of mixed opinions among Fed officials about whether interest rates are high enough.

Following last week's weaker-than-expected US wages report and Fed policy announcements, markets have priced in cuts of around 50 basis points (bps) this year, with a 62.2% chance of a cut of at least 25 basis points in September, according to Tools FedWatch CME.

CNBC INDONESIA RESEARCH

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