Trend of Weakening Rupiah Only Temporary, says BI

TEMPO.CO, Jakarta - Bank Indonesia said the trend of the rupiah weakening against the US dollar, which has been going on for at least the past two weeks, is a temporary symptom due to the uncertainty in the global financial market.

The pressure on the rupiah was unavoidable following the US dollar's greenback, which continued to strengthen in recent weeks, after differences in views were seen among various members of the Fed's Central Bank Committee while addressing the rate of economic growth and US inflation.

Executive Director of the BI Monetary Management Department Nanang Hendarsah in Jakarta on Monday explained that the uncertainty was also complemented by US President Donald Trump's latest statement about a trade war with China.

He was referring to Trump's threat to increase US import duties by 25 percent against various Chinese products worth 200 billion US dollars. 
"However, it is known that the dynamics caused by these statements are short-term in nature, as this statement can change," Nanang said.

Trump's statement has also disrupted the expectations of market players, who in the past few weeks have hoped for peace from trade negotiations between the two world economic giants.

"This has pushed the volatile yuan down, while the movement of shares in China also fell five percent," he said.

On Monday, BI applied three interventions (triple intervention) on the foreign exchange market, Government Securities and DNDF to maintain the rupiah exchange rate, following which the rupiah closed at Rp14,297 per US dollar on Monday. This showed a slight improvement because on Monday afternoon, the rupiah had dropped to a level of Rp14,300 per US dollar.

A look at the Jakarta Interbank Spot Dollar Rate (Jisdor) reference rate showed that the rupiah has continued to weaken since April 18, 2019, when it was still around Rp14,016 per US dollar. The reference rate for Jisdor on Monday showed the rupiah exchange rate at Rp14,308 per US dollar.

ANTARA