Rupiah slightly weakens on Thursday morning

JAKARTA. The rupiah exchange rate traded among banks in Jakarta on Thursday morning weakened by 7 points to Rp 14,140 per US dollar from Rp 14,133.

Samuel Sekuritas economist Rangga Cipta said in Jakarta that the US dollar had strengthened again against other currencies in Asia as markets had not yet fully responded positively the People’s Bank of China’s (PBoC) policy to cut its benchmark interest rate and secondary reserve requirements (GWM).

“Rupiah has also been suppressed. Bank Indonesia’s [BI] decision to cut its gross domestic product [GDP] projection has added beliefs that the country’s economic slowdown will continue to occur at least until the end of this year,” said Rangga as quoted by Antara on Thursday.

However, the analyst further said, BI could use the domestic economic slowdown as a reason to cut its benchmark interest rate (BI rate).

Rangga said there was still a hesitation on the US Federal Reserve (Fed) to increase its fund rate in September as the volatility of the US capital market was high. It was hoped that such a situation could hold back the further strengthening of the US dollar against rupiah, he added.

Earlier, BI governor Agus Martowardojo said pressures currently experienced by rupiah against the US dollar were relatively controllable compared to the ones affecting currencies of other countries.

“In the short term, please stay calm if pressures against rupiah occur; because, many currencies of our neighboring countries have been suppressed deeper than [than us],” he said.

Agus said both rupiah and the Jakarta Composite Index were suppressed by external pressures triggered by the US Federal Reserve’s (Fed) plan to adjust its fund rate, declines in global oil prices and China’s policy to devalue its Yuan currency.