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Rupiah has weak start against dollar after Idul Fitri holiday
A decline exceeding 2 percent is rare for the rupiah, which has seen an average movement of only 0.02 percent over the past year.
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Cash only: A teller arranges stacks of United States dollar and rupiah bills on March 1, 2024, at a money changer in Jakarta. (Antara/Muhammad Adimaja)
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n the wake of the Idul Fitri holiday, the Indonesian rupiah experienced a significant depreciation, crossing the Rp 16,000 mark against the US dollar during the market opening on Tuesday.
The currency depreciated by 326.5 points, or 2.06 percent, reaching Rp 16,174 per US dollar. It represents a notable drop compared with the previous closing of Rp 15,848 on April 5.
A decline exceeding 2 percent is rare for the rupiah, which has seen an average movement of only 0.02 percent over the past year. Historically, a depreciation of this magnitude was last observed on March 23, 2020, during the early days of the COVID-19 pandemic.
According to Bank Indonesia's monetary management department head, Edi Susianto, various global factors had contributed to the rupiah's post-Idul Fitri weak showing.
"The release of fundamental United States data shows that the US economy remains quite strong, with inflation and retail sales data above market expectations. Furthermore, the rupiah's weakening is also influenced by the escalating conflict in the Middle East, especially the direct retaliatory attacks from Iran to Israel," Edi said.
Financial market analyst Ariston Tjendra expressed concerns that the situation in the Middle East invited fears of a potential new war, which could disrupt supply chains, increase inflation and lead to a global economic slowdown.
"The situation leads market players to shift investments away from riskier assets, thus strengthening the US dollar and gold prices as safe assets," Ariston said, as reported by CNN Indonesia.
