TEMPO.CO, Jakarta - Rupiah's interbank exchange rate in Jakarta went down by 5 points to commence trading at Rp14,072 per US Dollar at the start of Tuesday's trading session.
"Market players are anticipating the release of Indonesia's latest inflation figures by the Central Statistics Agency (BPS) - and some may have decided to let go of some of their Rupiah-denominated assets in order as a buffer against potential losses, which drives the Rupiah into the red on Monday," said the Head of Research for NH Korindo Securities Indonesia, Reza Priyambada in Jakarta on Tuesday.
Reza explained that if Indonesia manages to post a low inflation rate, then the Rupiah could rebound into the green zone once more - but a disappointing inflation figure will make the Rupiah prone to further depreciations.
"Market players are expected to remain vigilant over the next couple of days - especially if Indonesia's inflation figure fails to impress market players," said Reza, who added that the Rupiah is also being pressured by the global manufacturing figures, which is expected to slow amidst the uncertainties surrounding the world's economic outlook.
A drop in manufacturing output could bode negatively for the currencies from emerging markets, which could drive investors to seek out safe haven currencies - including the US Dollar.
A researcher fo Mandiri Sekuritas, Leo Rinaldy, added that Indonesia's inflation figure for the month of August is expected to hover around the 0.63 percent mark - lower than previous month's figure which stood at 0.93 percent.
That said, Indonesia's year-on-year inflation is expected to increase to 7.43 percent - up from 7.26 percent last month. "The increasing year-on-year inflation will drive Bank Indonesia to keep its' interest rate unchanged at 7.5 percent, especially considering the risk posed by external shocks," said Leo.