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Rupiah sliding since Fed June meeting
Indonesia’s currency has been on a downward trend since June 14, a day before the latest Federal Open Market Meeting (FOMC).
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An officer arranges US dollar bills at a foreign exchange business in Jakarta on March 19, 2020. The latest Federal Open Market Meeting (FOMC) in the US has had a temporary impact on the rupiah, analysts have said. (Antara/Indrianto Eko Suwarso)
T
he rupiah has depreciated against the United States dollar since the Federal Reserve’s latest meeting, in which US monetary policymakers hinted at two interest rate hikes by the end of 2023.
Bank Indonesia (BI) quoted the Jakarta Interbank Spot Dollar Rate (JISDOR) at Rp 14,453 on Monday, down 0.35 percent from a day earlier and continuing a weakening trend that started shortly before the Federal Open Market Meeting (FOMC) held on June 15 and 16.
The rupiah’s depreciation was largely driven by the Fed’s meeting, said Josua Pardede, chief economist at publicly listed Bank Permata.
“Given that it is not driven by [weak] fundamentals, it should not be permanent,” Josua told The Jakarta Post in a phone interview on Monday. “Although there has been talk about tapering off [in the Fed’s bond-buying program], which we expect to take place next year, at least the market has anticipated it.”
The Indonesian currency joins other emerging market currencies, such as the Indian rupee and Turkish lira, which have also weakened against the greenback. On Monday late afternoon, the rupiah, rupee and lira were down 0.37 percent, 0.35 percent and 0.34 percent, respectively, Bloomberg data showed.
The rupiah’s exchange rate against the US dollar was estimated to hover between Rp 14,345 and Rp 14,395 on Monday, said Andry Asmoro, chief economist at publicly listed state-owned Bank Mandiri.
BI has maintained its seven-day reverse repo rate (7DRR) at a record-low of 3.5 percent, arguing that that stance was consistent with forecasts for low inflation and with efforts to support exchange rate stability and the economic recovery.
