Thursday, 22 October 2020 | 04:54 WIB

External Conditions Influence Weakening of Rupiah

Bank Indonesia Governor Agus Martowardjojo

JAKARTA, NETRALNEWS.COM - The weakening of the rupiah, which once touched IDR13,500 per US dollar, is said to be influenced more by external conditions and is temporary.

"Yesterday the weakening of IDR13,542 per US dollar in many cases was because countries in the world generally experienced a weaker currency against the US dollar," said Governor of Bank Indonesia (BI) Agus Martowardjojo in Jakarta, Wednesday (10/04/2017).

The strengthening of the dollar comes in the wake of US President Donald Trump's remarks that have furthered the tax reform plan in the country and are likely to gain support from parliament.

"The Fed also asserted the possibility of Fed Fund Rate hike in December is getting stronger, before the message was not too strong," said Agus.

The rupiah exchange rate traded between banks in Jakarta on Tuesday (10/03/2017) was at IDR13,542 per dollar, but on Wednesday morning it rose 89 points to IDR13,453 per dollar.

Concerning the assumption of the rupiah against the dollar in the 2018 State Budget Draft at IDR13,400, Agus believed the assumption is still in line with the range of rupiah exchange rate submitted by BI.

"We understand the exchange rate of IDR13,400, although currently the rupiah is at IDR13,542, we see this as a condition of external influence and it's temporary in nature," said Agus.

The dollar this morning weakened against the majority of the world's currencies, including the rupiah amid market expectations on US employment according to ADP (Automatic Data Processing) which probably showed fewer numbers in September than in August. Expectations are due to the impact of the storm that hit parts of the United States.

Nevertheless, the strengthening of the rupiah is predicted to be relatively limited following the comments by the Fed which is optimistic in raising the Fed's benchmark rate, a condition that could recover the dollar.