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Rupiah hits fresh low against dollar on Fed stance, RI budget concerns
The Indonesian currency was trading between Rp 16,300 and Rp 16,400 per United States dollar on Wednesday after hitting a low of Rp 16,419 on Monday, marking its weakest point since April 2020.
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A clerk counts United States dollar banknotes on May 22, 2024, at a money changer in Jakarta. (Antara/Rivan Awal Lingga)
T
he rupiah has plunged to its lowest level in four years, raising concerns about imported inflation and possibly prompting Bank Indonesia (BI) to take action.
Analysts have attributed the latest depreciation in the Indonesian currency to a combination of United States monetary policy and Indonesian fiscal policy.
The rupiah was trading around Rp 16,350 per US dollar on Wednesday after hitting a low of Rp 16,419 on Monday, marking its weakest point since April 2020, when the COVID-19 pandemic took a toll on many emerging market currencies.
Fed policy
The latest decline is primarily driven by the hawkish stance of the US Federal Reserve, which appears to be in no hurry to reduce its benchmark interest rate from the current range of 5.25 percent to 5.5 percent.
This has strengthened the US dollar and exerted additional pressure on the rupiah, according to DCFX Futures money market analyst Lukman Leong.
“The rupiah could break through Rp 17,000 if [BI] is not aggressive in its intervention,” Lukman said on Monday, as quoted by Tempo.
