TEMPO.CO, Jakarta - The rupiah is likely to remain stable for the last week of November, but with a tendency to weaken, Samuel Sekuritas Indonesia projected.
In a research released Tuesday, November 24, Samuel Sekuritas Indonesia economist Rangga Cipta said that pressure on the rupiah subsided last week after the US dollar's appreciation was held back by Fed's announcement of a likely interest rate hike in December.
"However, high expectations over a Fed Rate hike also create an opportunity for a short-lived rupiah depreciation," Rangga said as Bisnis Indonesia reported.
As the Fed Rate prepares to rise, Bank Indonesia (BI) is getting ready to loosen its monetary policies. The primary statutory reserves (giro wajib minimum/GWM) was cut last week and the BI Rate is likely to be lowered after the 2015 inflation is expected to fall below the three-percent year-on-year (yoy) target.
Rangga said that the narrowed current account deficit (CAD) and the increased GDP reflect stability and growth that can surface at the same time. However, the potential for monetary easing can serve as a negative sentiment that could correct the rupiah if the greenback strengthens in December.
"This week, the growth in money supply M1 and M2 can serve as additional clues over a credit growth pace, which rose in September—likely due to an expansion in government spending," Rangga said.
BISNIS | RR
