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Indonesia’s parliament has taken a significant step toward approving a larger spending plan and a wider fiscal deficit for the 2026 budget than initially proposed by President Prabowo Subianto. On Thursday, the parliamentary fiscal oversight panel endorsed a total spending plan of 3,842.7 trillion rupiah ($233 billion), marking a 9% increase over the estimated 2025 budget. The fiscal deficit is projected to reach 2.68% of GDP, slightly higher than Prabowo’s August proposal but still below the legal threshold of 3%. The panel also set a revenue target of 3,153.6 trillion rupiah, a 10% increase over 2025 estimates. A final parliamentary vote is expected on September 23, with Prabowo’s coalition likely to secure approval. The budget aims to support Prabowo’s ambitious GDP growth target of 5.4% for 2026, with a long-term goal of 8% growth by 2029. The government plans to leverage the wider fiscal gap to drive economic growth, particularly as the U.S. Federal Reserve is expected to maintain an accommodative monetary policy until mid-2026. However, economists have cautioned against relying heavily on bond issuance to fund the deficit, urging the government to explore non-tax revenue sources. The budget also includes increased allocations for regional transfers, though they remain below 2025 levels. Regional leaders had expressed concerns over potential tax hikes to cover shortfalls, prompting the government to adjust spending plans to maintain social and political stability. Key allocations include 335 trillion rupiah for a flagship free meals program and 335.3 trillion rupiah for defense spending. The budget reflects the government’s commitment to balancing economic growth with fiscal prudence.

The Indian rupee experienced a decline on Thursday, September 18, 2025, mirroring the downward trend of other Asian currencies. This movement followed the U.S. Federal Reserve’s anticipated interest rate cut and its cautious approach to further easing of benchmark borrowing costs. The rupee closed at 88.13 against the U.S. dollar, marking a 0.36% drop for the day. Meanwhile, Asian currencies saw declines ranging from 0.1% to 0.6%. The U.S. dollar index, which measures the dollar against a basket of major currencies, dipped slightly to 96.9 but remained above a 3.5-year low reached immediately after the Fed’s policy announcement. HSBC analysts noted that the Fed’s stance, while consistent with market expectations, leaned more towards hawkishness than dovishness. Traders predict that the rupee will exhibit two-way price action in the near term, influenced by broader dollar movements, with support near 88.45 and resistance around 87.75-87.80. A Reuters poll revealed that investors have increased short positions on the Indian rupee and the Indonesian rupiah, driven by concerns over central bank rate cuts in Indonesia and U.S. tariffs impacting India. Bearish bets on the rupee have surged to their highest level since early February. In a positive development, India’s Chief Economic Adviser V. Anantha Nageshwaran hinted that the U.S. might soon eliminate the punitive tariff on Indian goods and reduce the reciprocal tariff from 25% to 10-15%. India’s benchmark equity indexes, the BSE Sensex and Nifty 50, each rose nearly 0.4%, while the yield on the benchmark 10-year bond increased by 4 basis points to 6.51%. Tight rupee liquidity, caused by income tax outflows, led to higher daily funding costs, prompting banks to turn to the foreign exchange swap market. The swap rate between Wednesday and Thursday peaked at 0.50 paisa, indicating a rupee interest rate of over 6%, as banks sought funds at elevated costs.

Automakers in the United States are grappling with the financial strain imposed by tariffs introduced during the Trump administration, which have added billions in costs to the industry. Despite these challenges, car manufacturers have largely absorbed these expenses rather than passing them directly onto consumers, a strategy that has delayed significant price hikes. However, as tariffs persist, the pressure to adjust pricing is mounting. According to industry analysts, the average manufacturer’s suggested retail price (MSRP) for new vehicles in the U.S. has seen only a modest increase of less than 1% from mid-March to mid-August, as reported by Edmunds. This cautious approach is expected to continue, with automakers implementing gradual price increases, particularly for higher-end models that offer better profit margins. General Motors and Ford have cited gross tariff-related costs of $5 billion and $3 billion, respectively, for the year. To mitigate these expenses, companies are exploring various strategies, including internal cost absorption and shifting some burdens to suppliers or dealers. Hyundai North America’s CEO, Randy Parker, emphasized the importance of maintaining competitive pricing to retain customers, despite tariff-related costs eroding the company’s bottom line by approximately $600 million in the second quarter. Analysts predict that automakers will begin to raise prices more noticeably in the latter half of the year, which could dampen demand and lead to a decline in overall vehicle sales. Additionally, subtle cost pass-throughs, such as increased destination fees, which rose by 8.5% for the 2025 model year, are being utilized to offset tariff impacts without direct price hikes. Industry leaders, including AutoNation’s CEO Mike Manley, anticipate that automakers will maintain competitive pricing on flagship models while making minor adjustments across their portfolios over time. The competitive landscape and the importance of market share are key factors influencing this gradual approach to price adjustments.