Chatib: Rupiah will Weaken Further
16 September 2014 17:34 WIB
TEMPO.CO, Jakarta - The rupiah continues to depreciate in the last two weeks. Yesterday, the exchange rate reached 11,934 per United States dollar after starting-off strong in the beginning of the month with a rate of 11,769 per US dollar. Finance Minister Chatib Basri said the correction occurred ahead of the Federal Open Market Committee (FOMC) meeting which will take place this week.
According to Chatib, the rupiah will continue to be corrected until the United States central bank's decision is announced. Even so, he believes the exchange rate will eventually bounce back. "Investors will return to have a rational outlook on the Fed's decision," he said.
The Fed will hold a meeting on September 17 and 18, where analysts expect it to end its third quantitative easing (QE3) by no later than the end of 2014 or early 2015. With that, the Fed intends to raise interest rates, something that may destabilize the world's financial markets.
Juniman, an economist with Bank Internasional Indonesia, predicts otherwise. He said that the Fed will not raise interest rates until July 2015, hence the central bank is not expected to thoroughly evaluate the US economy in October. Therefore, he predicts the rupiah to continue being corrected until it reaches a rate of 12,000 per US dollar.
"The rupiah will fluctuate in the range of 11,800 to 12,000 per dollar," he told Tempo yesterday.
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