Rupiah Plummets as Investors Speculate

TEMPO.CO, Jakarta – The rupiah experienced another significant correction against the US dollar as market participants speculate. Fear that the first quarter's current account deficit might be over two percent prompted most investors to profit take.

As a result, the rupiah became the currency with the deepest correction in the Asia Pacific region. In yesterday's currency market, the rupiah fell 109 points (0.94 percent) to Rp11,630 per US dollar. 

Lukman Leong, analyst from Platon Niaga Berjangka, confirmed that speculative actions by market participants have pushed the rupiah further down. With the US dollar on a strong uptrend, investors' over-reaction to the current account deficit puts more burdens on the rupiah. "The rupiah weakened because of market players' excessive anticipation," he said.

Lukman said that the rupiah depreciation also implies imbalance in the supply and demand of the US dollar.  However, Lukman is certain that Bank Indonesia (BI) will refrain from intervening since the rupiah is still relevant with the economic fundamentals.

Today the rupiah is expected to move between Rp11,600 and Rp11,700 levels. "If the correction is very sharp and takes place in a short time, there is a chance that BI will intervene," he said.

MEGEL JEKSON