Rupiah Climbs to 14,665/USD in Response to BI Rate Hike
15 November 2018 20:18 WIB
TEMPO.CO, Jakarta - The rupiah`s interbank rate on Thursday afternoon strengthened against the US dollar by 100 bps, allowing the garuda to trade for 14,665 per dollar. Analysts said that the rupiah`s gain is a positive response to Bank Indonesia`s (BI) decision to increase the benchmark interest rate.
Valbury Asia Futures analyst Lukman Leong said BI's decision to raise the 7-Day Reverse Repo (7DRR) rate helped the rupiah from worse fluctuations. It also compensated investors' disappointment over October's trade balance deficit.
Bank Indonesia (BI) decided to increase the 7-Day Repo (7DRR) rate by 25 bps to 6.00%. This came as a result of the central bank's board of governors' meeting that ended today.
"The decision is Bank Indonesia's next step in reinforcing efforts to curb the current account deficit until it is within a safe territory," BI governor Perry Warjiyo said in Jakarta, Thursday, November 15.
Meanwhile, Indonesia's trade balance in October was at a deficit of US$1.82 billion. The Central Statistics Agency's (BPS) chief Suhariyanto said the deficit was due to high imports from the oil and gas sector during the month.
Meanwhile, Bank Woori Saudara Indonesia's money market analyst Rully Nova said that the rupiah's appreciation was also due to external factors. Defusing tensions from the US-China trade war acted as positive sentiments to assets in stable emerging markets, including Indonesia.
"The demand for rupiah-denominated assets increased, thus supporting the rupiah's position," Rully said.
ANTARA