The price movement of the dollar currency remained pressured against most major currencies. Including Rupiah traded in a positive zone. The Federal Reserve has also indicated that there will be an aggressive tightening cycle, so Bank Indonesia is now eyeing it.

Markets were buffeted by risk aversion amid regional US bank shares. The bank is now looking at further supported market expectations of rate cuts later this year.

Rate differentials between the US market prices indicate that the Fed will raise its benchmark overnight by a quarter point. If this does prove to be the last hike of the cycle, then the next big question is whether the FX market can survive again or not.

Many also ask how long rates will remain at these levels. The Fed also guided markets regarding rate cuts within the year.

FED Raises Benchmark Rate to Highest Level in Last 15 Years, and US Recession Is Nearing

The Fed has guided markets away from the possibility of rate cuts this year. Markets are pricing them in a zone that remains. Money markets are now pricing in a slightly more than 10% chance, and the Fed will begin cutting rates in June, with an estimated 80 bps.

"If the Fed is proven over 2023, this will be a difficult zone for the USD. USD will decline to extend later this year, but for now, the market is likely to run with the theme of a peak in Fed rates, possibly in the greenback's residual overvaluation," said HSBC.

"There are a lot of concerns in the US around the banking sector. This is a credit event and that feeds through to the economy, which goes quite quickly. So the central banks (Fed) are at or near the peak in their cash rates, said Jarrod Kerr, chief economist at Kiwibank.

The United States (US) Central Bank approved the 10th interest rate increase in just under a year. This provides a tentative hint that the tightening cycle is over.

However, the market is now guessing whether this is the last rate hike. Concerns over economic growth and a banking crisis make the Fed uncertain in presenting policy.

The statement Normal Powell, the chairman of the Fed, also said that the establishment of additional procedures might be appropriate within the target range in the future.

US inflation is still well above the target of 2%, which policymakers consider optimal. The Fed's economists also scheduled a meeting to warn that a shallow recession will likely be caused by banking problems, even if they are already high.

US recessionary pressure could have implications for the global economy because of the prospect of falling demand for goods and services. The Fed will not be too aggressive at the next meeting. Because at the highest level in the last 15 years.

The increase in the US Continuing Interest Rate Positively Impacts Indonesia; the Rupiah is Predicted to Soar

With the news that the US economy will make inflation soar, the capital outflow in the financial market is a matter of great concern. Mainly by the Fed, but the context of the Rupiah's pace is also related to the strengthening trend throughout the 1st to 2nd quarter of 2023.

"Thanks to the Fed being not too aggressive in raising interest rates, the difference between developed and developing countries is not too thin," said FEB UI economist Teuku Riefky.

This economic observer said that this was because the Fed's non-aggressive interest rates did not affect capital inflows in developing countries. He said that Indonesia's economy is already in perfect condition.

Rupiah strengthened 0.14% against USDD to IDR 14,680 per US dollar. The strengthening of this currency was further accelerated after successfully breaking the support level. Moreover, Indonesia's economic condition is considered excellent and can hold the US dollar.