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Jakarta Post

Rupiah weakens to Rp 15,000 per dollar amid stronger greenback, COVID-19 fears

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Tue, March 17, 2020   /   12:37 pm
Rupiah weakens to Rp 15,000 per dollar amid stronger greenback, COVID-19 fears A bank teller shows a US dollar bill at a bank in Jakarta. The rupiah depreciated 0.83 percent to Rp 15,057 against the greenback as of 11:40 a.m. in Jakarta on March 17, touching a level unseen since October 2018. (Kontan/Fransiskus Simbolon)

The rupiah fell to below the psychological level of Rp 15,000 per US dollar on Tuesday as the greenback strengthened amid investors’ fears over the spread of COVID-19.

The currency depreciated 0.83 percent to Rp 15,057 against the greenback at 11:40 a.m. in Jakarta, touching a level unseen since October 2018.  The Bank Indonesia (BI) Jakarta Interspot Dollar Rate (JISDOR) stood at Rp 15,083 to a dollar on Tuesday.

“Market players are not responding to the trade balance announcement as they are focusing on observing the government’s effort to tackle the spread of the coronavirus, which needs to be handled seriously,” TRFX Garuda Berjangka director Ibrahim wrote in a research note on Monday.

Read also: Indonesian stocks fall to 4-year low following Wall Street crash

Indonesia announced on Monday a US$2.34 billion trade surplus in February despite disrupted trade activities in China amid the spread of the coronavirus disease. The figure is the first surplus in four months and the highest since September 2011.

On the same day, the government announced a rise in confirmed COVID-19 infections to 134, with five deaths and eight recoveries.

Separately, Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira said the US Federal Reserve’s move to cut its interest rates to near zero and its quantitative easing policy also affected the rupiah as market players panicked over the prospect of global economic growth.

“Moreover, the dollar index has also strengthened 1.72 percent over the past week, signaling that the currency is considered a safe haven by market players as the global economy is shadowed by the possibility of imminent recession,” he said.

Read also: COVID-19 pandemic looms over Indonesia’s record-high trade surplus

Foreign investors dumped around Rp 480 billion (US$31.86 million) worth of stocks during Monday morning trade. They recorded more than Rp 8 trillion in net sell so far this year.

Last week, Bank Indonesia (BI) revealed foreign outflows of around Rp 31.76 trillion in government bonds and Rp 4.87 trillion in Indonesian shares since January, as investors flee to safe-haven assets. In its effort to stabilize the rupiah, the central bank has bought Rp 130 trillion in government debt papers since January, of which around Rp 110 trillion has been spent since COVID-19 spread outside China in late January.

“We are committed to remaining in the market to stabilize the rupiah by selling dollars as cash or domestic non-deliverables forward,” BI Governor Perry Warjiyo said recently.