BI: Global Issues Weaken Rupiah

TEMPO.CO, Jakarta – Bank Indonesia’s communication department director Peter Jacobs said there were several global issues that could weaken the rupiah. One of the strongest issues is the concern over the Federal Open Market Committee’s (FOMC) decision to increase its interest rate. 

According to Peter, FOMC in the third week of September 2014 could strengthen the dollar exchange rate towards world’s currencies. “The strengthening of the dollar in the global market results in constant correction of the rupiah,” he said on Tuesday. 

Another issue is Scotland’s separation from the UK. However, Peter said the effect of this issue was still temporary, so the rupiah may still be normal. 

The department’s executive director, Tirta Segara, said besides those two issues The Fed’s monetary policy normalization had caused market participants to look into investing in the US. Moreover, he added, there was a negative sentiment from developing countries that sovereign rating would decrease. “The effect is evident in the weakening of regional currencies.” 

The rupiah is currently traded at Rp11,971.3 per US dollar. Zulfirman Basir, analyst from PT Monex Investindo Futures, said the dollar’s strengthening was a little bit held back as FOMC meeting neared. “Investors expect that The Fed will issue a more appeasing statement,” he said. 

AISHA SHAIDRA