TEMPO.CO, Jakarta - Weaker demands for the US collar in the global market is pushing the rupiah into the green zone in the second week of September 2014. Lana Soelistianingsih, an economist for Samuel Asset Management, said that the slowing growth of the American labor market is easing the pressure the dollar is exerting against other currencies in the world market.
“As such, we can see that the currencies of the developing world is trading at better positions, including the rupiah,” said Lana on Tuesday, September 9, 2014.
Throughout the trading session on Monday, September 8, 2014 the rupiah gained 33 points or 0.28 percent to close at Rp11,726 per US dollar at the end of the session. According to Lana, the main driver of the weakening dollar is the lower-than-anticipated US August job figures, which stand at 142,000—far below the market expectation of 212,000.
The lackluster job figure comes amid increases in the base wage rate, which were also below market expectations. The combination of the data seems to suggest that the Federal Reserve Bank of America may delay increasing the interest rates for the Fed Fund Rate.
Apart from external positive sentiments, the rupiah’s gains are also fueled by Indonesia’s increasing foreign exchange reserves, which currently sit at US$ 111,22 billion, equivalent to six-month worth of imports. The increases are driven by Indonesia’s growing exports profits, rather than a result of foreign debt repayments. “This helps to ensure the availability of US dollars, domestically,” said Lana.
However, the gains are expected to be temporary as the weakening dollar is often used as a cue for investors to reap short-term benefits. Once the US economic figures are back on track, demands for the dollar will return.
Lana predicts the rupiah would hover around Rp11,720-11,780 per US dollar as corporate demands for the US dollar tend to increase at the end of the third trimester of the year. “ The rupiah will experience more gains once it manages to trade below Rp11,680 per US dollar,” she said.