Greenback Strong on US Financial Recovery; Rupiah Slips Further

TEMPO.CO, Jakarta – Expectations over the release of the United States retail data made investors more inclined to purchase US dollars. On yesterday's currency trade, the rupiah lost 20 points (0.17 percent) against the greenback, closing at Rp12,227 per US dollar. The high demand for US dollar in global markets subdued Asian currencies against the greenback.

Zulfirman Basir, analyst of PT Monex Investindo Futures, said market participants expect that improvement in the American retail sector showed that consumption rate is increasing. "With the US economy recovering, investors will be more interested to invest in dollar portfolios," he said yesterday.

On the other hand, the economic recovery in America increases the US' financial investment prospects for next year. The end of loose monetary policy influences the greenback stronghold on emerging markets' currencies, including the rupiah.

Zulfirman said the dollar appreciation could actually be used to boost foreign exchange earnings from the commodity sector. Unfortunately, prices of mainstay commodities, especially coal and CPO, are on a downtrend.

Domestically, the market is still looking out for political risks following what with the dominance of the opposition party in parliament. The Red and White Coalition's position could make things difficult for Joko Widodo's administration to implement its policies. Nevertheless, the market remains hopeful that Jokowi's coalition will take on other parties, so that it could become a majority in parliament.

For today, Zulfirman predicted the rupiah to move within the range of Rp12,200 to Rp12,250 per US dollar. The rupiah also has the opportunity to note a limited gain after the inauguration of Joko Widodo on October 20, 2014, but this gain is not expected to last. 

PDAT | M. AZHAR