Rupiah Down to Rp12,147 per US Dollar
2 October 2014 18:14 WIB
TEMPO.CO, Jakarta - The rupiah interbank exchange rate in Jakarta on Thursday morning slid by 22 points to open at Rp12,147 per United States (US) dollar, down from its previous position at Rp12,125 per US dollar.
"The combination of negative sentiments, both from abroad and domestic, is adding pressure to the rupiah's value. The robust economic recovery of the US, the reduction of quantitative easing stimulus packages, and the possibility of a Fed rate hike, is pressuring our domestic financial market," said Rully Nova, an analyst for Bank Himpunan Saudara in Jakarta on Thursday.
According to Rully, those factors combined push investors to seek out US dollar as a buffer against possible future losses, which is expected to drive the value of the US dollar up as demand increases.
Unfortunately, the domestic political condition is not providing the rupiah with the boost it needs, as investors interpret the current situation as a sign of further instability within the government.
Although recent releases from the Central Statistics Agency (BPS) suggest that Indonesia's deficit is steadily decreasing, it has not decreased enough to allow it to push the rupiah back into the green zone.
"It is hoped that inflation and deficit could be minimized in the future, so they won't impact the rupiah exchange rate," said Rully.
Reza Priyambada, an analyst for Woori Korindo Securities Indonesia, said that the gains of the US dollar could be explained by the weakening of the Japanese yen and the euro in the world market. Recent economic releases indicate that Japan's growth is slowing down, while European manufacturing demand declines.
"It is hoped that investor will positively respond to the plans to keep the current Bank Indonesia (BI) interest rate, as it will help the defend the rupiah from further losses," said Reza.
ANTARA
