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Rupiah gains ground as Fed keeps rate unchanged
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Illustration of Indonesian banknotes. (Shutterstock/devmograph)
T
he rupiah has strengthened against the United States dollar in the past few days, following the US Federal Reserve (Fed) decision to maintain its benchmark rate on Nov. 1, which allows emerging markets including Indonesia to gain traction on capital inflows and for their currencies to appreciate.
One US dollar bought Rp 15,550 on Monday, down 1.41 percent over the weekend from Rp 15,771 on Friday, according to Bank Indonesia’s (BI) Jakarta Interbank Spot Dollar Rate (JISDOR) exchange rate.
This marks a turn around after weeks of a weakening rupiah. Before the Fed’s rate announcement on Nov. 1, the rupiah had been hovering above Rp 15,900 for some weeks and had inched up to Rp 15,966 against the greenback hours before the announcement.
Currency market analyst, Ariston Tjendra, stated that the rupiah's position was influenced by the lower-than-expected economic data in the US such as the unemployment rate, measured in non-farm payrolls (NFP), as quoted from Antara.
The NFP shows the monthly unemployment data and the figure stood at 150,000 in October, below market expectations of 180,000. In September, the figure was 297,000.
The overall US unemployment rate was hovering at 3.9 percent, higher than the projected 3.8 percent, while also being the highest in more than a year.
Ariston suggests that those readings have caused the US dollar to weaken against major foreign currencies, as investors perceive they will lead the Fed to end its period of high-interest rates soon.
