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The Jakarta Post
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Rupiah strengthens by 55 points on Friday morning

  • The Jakarta Post

    The Jakarta Post

Jakarta | Fri, September 13, 2013 | 01:27 pm

The rupiah exchange rate traded inter banks in Jakarta on Friday morning strengthened by 55 points to Rp 11,295 per US dollar from Rp 11,350 due to a recent increase in Bank Indonesia'€™s (BI) benchmark interest rate.

'€œThe BI rate increase to 7.25 percent had a positive sentiment on the domestic exchange rate,'€ said Bank Himpunan Saudara market analyst, Ruly Nova, in Jakarta on Friday, as quoted by Antara news agency.

Ruly said pressures on the rupiah would calm over the next few days due to expectations that BI would again increase its benchmark interest rate because inflation potentials remained high.

'€œInflation is expected to hit between 9 to 9.5 percent this year, so that there is still potential for the BI rate to increase,'€ said Ruly.

The increase of the BI rate, Ruly said, would spur foreign investments because it could widen the range of investment portfolio yields with developed countries; therefore, the domestic exchange rate could strengthen.

'€œThe rupiah could return to round Rp 10,000 per US dollar,'€ said Ruly.

Trust Securities'€™ head of research, Reza Priyambada, added that the recent increase of the BI rate would likely have a positive impact on the stock market.

However, a revision of Indonesia'€™s economic growth target to 5.5 - 5.9 percent from 5.8 - 6.2 percent could have a negative impact on the domestic exchange rate. (ebf)

 

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