Rupiah Needs Positive Boost

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  • Uang Rupiah. TEMPO/Dinul Mubarok

    Uang Rupiah. TEMPO/Dinul Mubarok

    TEMPO.CO, Jakarta – The rupiah moved horizontally throughout yesterday's trade. In the currency market, the rupiah edged up 6 points (0.05 percent) to close at 11,970 per US dollar.

    Rangga Cipta, an economist with Samuel Sekuritas Indonesia, said that without the support of a strong sentiment, the rupiah is only going to fluctuate.

    According to Rangga, although The Fed did not raise rates, a reduction in dollar liquidity in global markets due to a continued tapering off will continue to press regional currencies. Most countries are still stuck with fiscal and current account deficits, making their currencies vulnerable to correction because of depleting liquidity.

    "(The Fed's) monetary stimulus package that is only US$15 billion left is increasingly eroding regional exchange rates' resilience," he said yesterday.

    Fortunately, China's positive manufacturing data is capable of supporting the rupiah. HSBC Flash Manufacturing PMI figure for September, which grows to a level of 50.5, provided a breath of optimism for investors that China's economy will continue to improve.

    "Currency commodities, including the rupiah, responded positively to Chinese manufacturing data," said Rangga.

    Rangga said the rupiah also gained as a response to the government's plan to raise fuel oil prices, which built expectations that the current account balance would improve.

    The lack of positive sentiments will keep the rupiah fluctuating between 11,850 and 12,000 per US dollar. Bank Indonesia also stands guard, to make sure that the rupiah does not exceed its psychological level of 12,000 per US dollar.