ASIA NEWS NETWORK
WE KNOW ASIA BETTER
Negative sentiment continues to affect Indonesian currency
Publication Date : 21-08-2013
Speculation concerning the US Federal Reserve's plan to reduce its monetary stimulus package has continued to negatively affect the rupiah exchange rate.
The rupiah exchange rate traded during interbank transactions in Jakarta on Wednesday morning weakened 120 points to 10,850 per US dollar from 10,730.
“The rupiah exchange rate is still being affected by external conditions while market players continue to worry about the reduction of the Fed’s monetary stimulus. However, the Federal Open Market Committee (FOMC) meeting results will soon be made public,” Monex Investindo Futures’ money market analyst, Zulfirman Basir, said on Wednesday.
He said market investors were also apprehensive about Indonesia’s protracted negative trade balance, high inflationary pressures, economic slowdown and the decrease in the country’s foreign exchange reserves.
“Nevertheless, the weakening of the rupiah is occurring in stages and is still controllable, as Bank Indonesia (BI) remains committed to maintaining the stability of the rupiah,” said Zulfirman.
He forecast that the rupiah exchange rate would trade between 10,700 and 11,000 per US dollar on Wednesday.
Platon Niaga Berjangka's chief analyst, Lukman Leong, said that overall, the weakening of currency rates was also taking place in other Asian countries, such as India.
“However, the weakening of the Indian rupee has been slow, while the rupiah has dropped significantly during the last several days, despite the fact that negative sentiment influenced by inflation data and the trade deficit were already known factors in the market,” said Lukman.
He added that the rupiah could stabilize if inflows of foreign funds entered the capital market.