Rupiah Trades at Rp12,722 per US Dollar at Tuesday's Close  

TEMPO.CO, Jakarta - The rupiah interbank exchange rate slipped further by nine points at the end of Tuesday's trading session to close at Rp12,722 per United States (US) dollar—down from its previous position at Rp12,713 per US dollar. 

An analyst for Bank Himpunan Saudara, Rully Nova, said that external factors were putting a significant amount of pressure on the rupiah, which was depreciating against the greenback as market players predicted that the Federal Reserve Bank of America (The Fed) might raise its core interest rates sooner than they had initially predicted. 

"Market players have initially predicted that the Fed rate will rise in mid-2015, but the US' robust economic recovery may drive them to raise the rates sooner," said Rully. "A higher interest rate means better returns, which will consequently attract more investors into its market." 

That said, Rully continued, Bank Indonesia (BI) was closely watching the rupiah's movements to ensure that it remained within an acceptable band. Rully also said that Indonesia's foreign exchange reserves were enough to allow BI to control Indonesia's monetary fluctuations. On last count, Indonesia's foreign exchange reserves stood at US$111,14 billion in November 2014. 

An analyst for Bank Mandiri, Reny Eka Putri, added that the rupiah's downwards slide was arrested as the evening drew to a close because BI was actively intervening in Indonesia's domestic market.

"If the negative correction remains unaddressed, the rupiah may slide beyond Rp13,000 per US dollar, which will disturb market psychology," she said.

ANTARA