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Fed, geopolitics may push rupiah to historic low
The rupiah has been on a downward slope in the past week amid uncertainty about US monetary policy and geopolitical conflicts. Analysts do not rule out a historic low for Indonesia’s currency.
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A clerk arranges US dollar bills at a foreign currency exchange outlet in Jakarta in March 2020. (Antara/Indrianto Eko Suwarso)
T
he rupiah has been on a downward slope in the past week amid uncertainty about United States monetary policy and geopolitical conflicts. Analysts do not rule out a historic low for Indonesia’s currency.
Financial market analyst Ariston Tjendra says there was "a possibility” of the rupiah touching or breaching the historic low of Rp 16,950 to the US dollar, given “how close it is now” to that level.
The national currency stooped to that exchange value back in 1998, when the archipelago experienced a monetary crisis that left an imprint on the country’s economy.
In this century, the rupiah came closest to the 1998 nadir in March 2020, when the pandemic shook the global economy and pushed the currency down to Rp 16,640 per dollar.
Not far from that level, the rupiah touched a multiyear low of Rp 16,340 against the greenback on Tuesday.
The depreciation was fueled by two big global events, namely the US Federal Reserve signaling it would keep its key interest rates higher for longer and geopolitical tension exacerbated most recently by attacks between Iran and Israel, Ariston told The Jakarta Post on Wednesday.
Hawkish Fed
