TEMPO.CO, Jakarta - The rupiah is expected to strengthen now that the Eid holiday is over, despite a FFR hike.
Bank Permata economist Josua Pardede said that The Federal Reserve's decision to raise interest rates by 25 bps may give power to the US dollar over global currencies.
However he believes the rupiah will be fine, as Bank Indonesia (BI) has taken preemptive policies to stabilize the currency. BI increased the 7-day repo rate (7DRR) twice in May.
In the last few days the Dollar Index has strengthened by some 1.8 percent since the FFR was increased last Thursday. Nevertheless, the US treasury yield tends to decline and is now around 2.9 percent.
With the situation, Josua said the rupiah's spot rate will weaken during the first after-Eid trade week, as the one-month NDF USD/IDR tends to increase over the last week.
Meanwhile, Garuda Berjangka president director Ibrahim projected the rupiah to rebound after the long Eid holiday to "around Rp13,800 to Rp14,000 per US dollar".
On Friday, June 8, the rupiah closed with a 57-bps correction or down 0.41 percent to trade for 13,932 per US dollar.
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