TEMPO.CO, Jakarta - An analyst for Woori Korindo Securities Indonesia, Reza Priyambada, said that the rupiah's downtrend would continue for the time being. "The downtrend will continue despite some earlier gains," said Reza in Jakarta on Tuesday, October 14, 2014.
According to Reza, the normalization of the Fed's policies was generating negative sentiments that pressured the rupiah's value. "The majority of investors still choose United States (US) dollars for their transactions," said Reza, adding that the US dollar was rallying amid the negative buzz surrounding the Fed's changed outlook.
Previously, the Deputy Governor the Federal Reserve Bank of America, S. Fisher, said that the slowing global economy had prompted the Fed to reconsider its plans to raise its interest rates. "Market players are more concerned about the consequences of ending the Fed's stimulus package," said Fisher, referring to the possibility of a US dollar shortage once the Fed stopped pumping stimulus into the economy.
These factors, according to Reza, is fuelling the gains of the US dollar. At current conditions, Reza predicts that the rupiah will hover around its resistance level of Rp12,197 per US dollar. "The rupiah needs a significant sentiment boost for it to start gaining again," said Reza, who predicts that the rupiah may experience a slight uptrend in the near future.
Bank Indonesia's (BI) middle rate is expected to be between Rp12,213-12,196 per US dollar.