TEMPO.CO, Jakarta - Finance Minister Bambang Brodjonegoro said that the rupiah's most recent correction against the US dollar is caused by negative sentiments sparked by The Federal Reserve's announcement that they will raise interest rates this year. The statement fueled the greenback to leap ahead of major world currencies.
"[The statement] automatically strengthened the dollar and weakened almost all currencies," the minister said in Jakarta last weekend.
On the market's trade opening Friday last week, the rupiah slipped 0.15 percent to Rp13,440 per US dollar AS.
Based on Bank Indonesia's (BI) middle rate, the rupiah traded was traded for Rp13,448 per US dollar, with a selling price of Rp13,515 and a purchase price of Rp13,381 per US dollar.
The day before on Thursday's trade, the rupiah closed 45 points (0.34 percent) lower at Rp13,420 per US dollar.
Bank Indonesia last week admitted that the rupiah has gone undervalue or dropped below its market price compared to the currencies of Indonesia's major trading partners. BI Governor Agus Martowardojo said that based on its REER (real effective exchange rate), the rupiah has fallen slightly below 100.
Agus said that this correction is actually good for Indonesia's competitiveness. However, it must be coupled with without improvements in infrastructure and the realization of investment interest. That way, exports can improve amid declining commodity prices dropped due to a downtrend in volume.
BI senior deputy governor Mirza Adityaswara said the rupiah has been undervalued for quite some time now. It began when it was hit by sentiments from speculations over the Federal Reserve's monetary normalization agenda in 2013.
Domestically, he said, the rupiah receives fundamental support from the state's improving current account. However, the greenback's strong gain over worldwide currencies is overpowering the rupiah's efforts to climb; making investors unable to see that Indonesia's current account deficit is improving.
FAIZ NASHRILLAH | TRI ARTINING PUTRI