Rupiah left IDR13,000 zone

September 28, 2016, 11.29 AM  | Reporter: Namira Daufina, Wuwun Nafsiah
Rupiah left IDR13,000 zone


JAKARTA. Rupiah finally left psychological level of IDR13,000 per US$1, as rupiah strengthened the most since May 2015, while rupiah to US dollar spot rate closed at IDR12.955 per US dollar on Tuesday (27/9). On the same day, rupiah to US dollar spot rate had even once hit IDR12,886 per US dollar.  Since the beginning of 2016, rupiah has strengthened by 6.04%.

However, some analysts predicted that the strengthening of rupiah may not last in the long run. Analyst at Bank Mandiri Rini Eka Putri said that the rupiah strengthening was driven by The Fed or American Central Bank’s decision to maintain its interest rate at the level of 0.25%-0.50%. The strengthening was also caused by The Fed’s decision to revise the plan for raising the interest rate in 2017 from three times to two times.

The strengthening of rupiah was also driven by several domestic factors, such as BI or Central Bank’s decision to cut 7-days reserve repo rate to 5%.  After the rate cut, BI’s interest rate is still higher and attractive compared to low, even negative interest rate in other countries.

Some domestic economic factors also show positive indicators. To date, Indonesia can maintain the amount of foreign exchange reserves at above of US$100 billion, as well as surplus in trade balance. The recent economic growth is also relatively stable at around 4-9%-5.2%.

Economist at Samuel Aset Manajemen Lana Soelistianingsih said that capital inflow from share and bond markets contributed the most to the strengthening of rupiah. On Monday (27/9), government gained IDR12 trillion of funds from government bonds (SUN) bidding.  Aside of funds from bond market, tax amnesty revenues also contributed to the strengthening of rupiah,

Economist at Kenta Institute Eric Sugandi said that the fair value of the rupiah is ranging from IDR12,800-IDR13,000 per US$1. Rupiah may return to IDR13,000 per US$1 if The Fed raises its interest rate in December 2016.

Aside of The Fed’s interest rate, market also focus on the result of  upcoming election in the United States of America.

Analyst at Bank Mandiri Reny Eka Putri predicted that rupiah has potential to deppreciate to IDR13,000-IDR13,200 per US$1, while economist at Samuel Aset Manajemen Lana Soelistianingsih projected that rupiah will deppreciate to IDR13,200 per US$1.

(MUHAMMAD FARID/Translator)

Editor: Yudho Winarto

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