Speculation on Fed Rates does little for Rupiah

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  • TEMPO/Eko Siswono Toyudho

    TEMPO/Eko Siswono Toyudho

    TEMPO.CO, Jakarta - Speculations on the US central bank's (The Fed) interest rates are correcting the greenback. Investors become pessimistic and opt to sell their dollar assets, causing regional currencies to fluctuate against the US dollar. However, the correction does little for the rupiah, which only managed edge up by 0.8 points (0.01 percent) to close at 11,764 per US dollar.

    Low expectations on the US job claims in August led investors to let go of dollar-denominated portfolios. "Pessimism over Fed's interest rates lowered investors' interest on the dollar," said Ibrahim, executive director of PT Equilibrium Komoditi Berjangka.

    Ibrahim predicts the Fed is unlikely to raise interest rates any time soon, due to military tensions in Ukraine that fuel high demand for the US dollar as a safe haven.

    "In the midst of Ukrainian conflict, it is difficult for the Fed to talk about interest rates," Ibrahim said yesterday.

    Rupiah is predicted to move in a consolidative range of 11,742 to 11,800 per US dollar level. However, investors' doubts regarding the ceasefire between Ukraine and Russian-backed rebels spark caution in collecting risky assets such as the rupiah.

    "The rupiah appreciation is also more or less influenced by mining companies that are allowed to resume their exports of concentrates," said Ibrahim.