Rupiah Exceeds Rp12,000 per US Dollar

TEMPO.CO, Jakarta - The United States (US) dollar continued to rally following the decision by the Federal Reserve Bank of America to maintain its low interest rate policy while continuing to taper off its economic stimulus.

The rally came after a number of the Fed's board members predicted that The Fed would raise its interest rate to around 1.375% towards the end of 2015, which led investors to seek US dollar denominated assets in anticipation for higher dividends in the future.

"Although nothing new came out of the Fed's meeting apart from the reduction of economic stimulus, investor saw that the meeting ended with a more aggressive outlook on the future of the economy," said an economist from Samuel Sekuritas Indonesia, Rangga Cipta.

Rangga said that the Fed's decision had a significant impact on the exchange rate of the US dollar. According to Rangga, high demands for the US dollar was a contributing factor to the losses experienced by the rupiah.

The US dollar is gaining against other major regional currencies. As per 12.15 Jakarta time, the rupiah slid by 67.9 points to trade at Rp12,037.5 per US dollar. The Korean won also slipped by 0.66 percent to trade at 1,041.15 won per US dollar, while the Japanese yen weakened by 0.36 percent to 108.76.

Although the rupiah is expected to continue to weaken throughout the rest of the week, the losses are not expected to continue. In the short run, the rupiah is predicted to remain between Rp11,950-Rp12,100 per US dollar.

MEGEL