TEMPO.CO, Jakarta - Uncertainties surrounding the policy direction of the US Federal Reserve has weakened the dollar against a number of regional currencies. Investors are anxiously waiting for the Chairman of the US Federal Reserve, Janet Yellen, to give her address on the state of the workforce - although market players are pessimistic that the speech will contain anything that had not been said before. Rupiah inched higher by 7.5 points (0.06 percent) to trade at 11,679 per US Dollar on Tuesday, August 19, 2014.

Yellen is slated to deliver her address on the lack of growth in the US workforce. She believes the increase in non-farm payrolls is actually supported by part-time workers will force the Fed to maintain a low interest rate to sustain economic growth.

An economist for Samuel Sekuritas Indonesia, Rangga Cipta, said that the movements of the US Dollar reflects the market’s reaction to the aforementioned possibility. The diminishing hope that the Fed will up its’ interest rate has reduced the attractiveness of US Dollar-denominated assets for the time being. “The decrease in global investors’ confidence is reflected by the decrease in the index of US Treasury bonds - which went down by 0.27 points,” said Rangga.

On the other hand, the US dollar continues to be affected by the escalating military conflict between Ukraine and Russia. Peace talks between the two countries has led to a decrease in demand for the US dollar as a ‘safe haven’ for investors.

That said, the gains made by the rupiah is not guaranteed to last as the Constitutional Court is slated to announce their ruling on the presidential election result dispute case on August 21, 2014 - leading investors to reduce their ownership of Rupiah denominated assets to protect against potential losses. “So far, uncertainties still remain and Rupiah will continue to fluctuate,” added Rangga.

As of Wednesday, August 20, 2014, Rupiah is predicted to trade within the range of 11,500 to 11,700 per US Dollar. The slight uptrend of the rupiah is sustained by market expectations of Joko Widodo’s victory in the presidential election result dispute case.

MEGEL JEKSON