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Rupiah hits lowest point this year
A rising US dollar is putting pressure on other currencies and has sent the Indonesian rupiah to its lowest level this year.
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Illustration photo of Indonesian banknotes (Shutterstock/devmograph)
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rising United States dollar is putting pressure on other currencies and has sent the Indonesian rupiah to its lowest level this year.
One dollar bought just over Rp 15,622 on Thursday evening, meaning the Indonesian currency lost more than 2.3 percent over the past month. It touched a low of 15,647 on Wednesday, the lowest so far this year.
The depreciation reflects current dollar strength rather than rupiah weakness, as more market actors see indications for a hawkish near-term stance of the US Federal Reserve (Fed).
The Japanese yen dropped below the psychologically meaningful level of 150 to the greenback this week, and the US dollar index benchmark has been on a rising trend for months, gaining around 7 percent since mid-July.
Economists asked by The Jakarta Post suggested that the dollar rally would not last much longer, irrespective of whether the Fed decided to hike the federal funds rate (FFR) in November or not.
They expect the rupiah to bottom out this month, prior to the Federal Open Market Committee’s (FOMC) meeting on Nov. 1, in which the Fed makes its interest rate decisions.
Late last month, Bank Indonesia (BI) Governor Perry Warjiyo said the central bank expected the Fed to hike its key interest rates by 25 basis points (bps) in November after keeping the FFR unchanged in the September meeting.
