Rupiah Expected to Plummet over Greece Default

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  • TEMPO.CO, Jakarta – Analysts predicted Greece's financial rattle will lower the value of regional currencies in the long term, including the rupiah. As the euro and the pound sterling become no longer attractive, investors are likely to be more inclined in greenback investments; further depreciating the rupiah.

    LBP Enterprise analyst Lucky Bayu Pramono yesterday predicted the rupiah to face a test level of up to Rp14,000 per US dollar until the end of the year.

    Macro-wise, Greece's default could affect the conditions and earning potential of each country in Europe and Asia. Although Greece is not a sole contributor, it still plays an important role in the regional import-export activities.

    In terms of export, Indonesia will face reduced demand from trading partner countries.

    Yesterday, Greece announced that it is unable to pay a €1.6 billion debt to the International Monetary Fund (IMF). Greece becomes the first developing country that fails to pay its debt to the institution.

    Bank Indonesia middle rate yesterday recorded the rupiah at Rp13,337 per US dollar, down from Wednesday's Rp13,331.

    The current rupiah value is far below the macro assumptions in 2015 Amended State Budget that pegs it at Rp12,500 per US dollar.

    As of May, the Central Statistics Agency noted that the rupiah has depreciated by 2.06 percent.

    RR