Rupiah Pressed by Current Account Projections
23 April 2014 15:08 WIB
TEMPO.CO, Jakarta - As predictions of a current account deficit looms over the domestic economy in the first quarter of this year, the rupiah's rate is receiving more pressure. Amid the US dollar uptrend, the negative sentiment pushed the exchange rate to weaken compared to most other regional currencies. In the money market, the rupiah dropped 75 points (0.66 percent) to Rp11,521 per US dollar.
Investors' anxiety began when Bank Indonesia (BI) Governor Agus Martowardojo said last week that the current account deficit will probably exceed two percent. The estimation is higher than the current account deficit in the previous quarter, which stood at 1.98 percent.
Currency observer, Ibrahim, acknowledged that the rupiah depreciation was triggered by concerns about ballooning current account deficit. The growing deficit, he said, has built a perception that there is a reduced availability of the US dollar liquidity. "Market participants have begun to worry about the dollar liquidity," said Ibrahim.
The market's anxiety increases as most domestic companies have scheduled their dividend payments at the end of April. The dividends will also be paid to overseas capital owners (dividend repatriation), which will likely increase capital outflow. "Dividend repatriations add more threat to the US dollar liquidity in the domestic market," Ibrahim asserted.
On the other hand, the United States' improving economic data is also pushing the rupiah further down. Positive expectations over the US economy had increased the ownership of dollar-denominated assets. Today, the lack of positive sentiment is expected to correct the rupiah to the range of Rp11,451 to Rp11,569 per US dollar.
MEGEL JEKSON