Rupiah weakens 23 points on Monday afternoon

JAKARTA. The rupiah weakened by 23 points to Rp 12,103 per US dollar from Rp 12,080 in trading among banks on Monday afternoon.

PT Platon Niaga Berjangka analyst, Lukman Leong, said in Jakarta on Monday that the failure of the economies of Asian countries, in particular China, to revive was partly behind negative sentiment regarding Indonesia’s financial markets.

“The external factors have not yet supported the strengthening of the domestic currency while at the same time, exchange rate corrections have also occurred in several prime global currencies. Such a lack of positive sentiment will boost currencies categorized as ‘safe havens’, such as the US dollar,” said Lukman as quoted by Antara news agency.

He added the impact of the US Federal Reserve’s (Fed) stimulus tapering had burdened the currencies of developing countries, including Indonesia.

“The ‘tapering’ effect will cause the US dollar’s liquidity to continuously tighten,” said Lukman. He added that this year’s inflation, which is expected to remain high amid the ongoing instability of Indonesia’s economy, was another cause of negative sentiment.

“It is hoped that the government can control domestic food prices to curb the rate of inflation,” said Lukman.

Trust Securities’ head of research, Reza Priyambada, said a decline in the latest US jobless rate showed that the country’s economy was tending to recover, which led to the strengthening of its currency.

However, Reza said, optimism about increases in foreign exchange reserves of ASEAN countries, including Indonesia, could hopefully counter negative sentiments about the rupiah.

Bank Indonesia’s median rate data on Monday showed that the rupiah strengthened to Rp 12,110 per US dollar from Rp 12,127 on Friday. (ebf)