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JAKARTA. The rupiah exchange rate as of Wednesday morning had weakened by 140 points, to Rp 13,747 per US dollar from Rp 13,607.
Samuel Sekuritas economist Rangga Cipta said in Jakarta on Wednesday that the rupiah exchange rate was now at its weakest level in 17 years.
He said the domestic currency had been negatively affected by the Chinese government’s decision to devalue the yuan.
“Indonesia’s position as one of China’s main partners and commodity exporters means that the country’s overall economic prospects are suffering from the Chinese government’s policy,” said Rangga as quoted by Antara.
He said the yuan devaluation was conducted to boost the competitiveness of China’s export goods that had continued to decline because, since 2011, the country’s annual export growth had consistently slowed, along with its gross domestic product (GDP) growth.
“Because of the yuan devaluation, almost all currencies in the Asia-Pacific region have experienced quite a sharp fall, along with declines in commodity prices,” said Rangga.
Domestically, he said, market players were waiting for Indonesia’s current account data, which was scheduled to be released later this week, and the government’s planned cabinet reshuffle. Generally, the analyst said, negativity would still dominate the rupiah’s movement in the middle term.
Bank Mandiri’s finance market analyst, Rully Arya Wisnubroto, said there had been no data on domestic sentiment, negative or positive, to suggest that the rupiah exchange rate would move in a positive direction again soon.
“Indonesia’s second-semester economic data for 2015, which has slowed because of circulating news of Cabinet reshuffle plans, [along with other factors] has brought negative sentiment to the domestic currency,” he said.
Given the current situation, Rully said it was likely that Bank Indonesia would not be too active in carrying out interventions because the impact on the country’s foreign exchange reserve would be negative. (ebf)
