Jakarta, CNBC Indonesia – The rupiah yesterday managed to strengthen sharply against the United States (US) dollar as well as stop the poor performance for 12 days. It didn’t stop there, the rupiah shot up again in early trading on Wednesday (8/12).
According to Refinitiv data, as soon as trading was opened, the rupiah immediately strengthened 0.24% to Rp. 14,340/US$. The rupiah’s appreciation then increased to 0.31% to Rp 14,330/US$ a few minutes later.
The improving sentiment of market players has supported the strengthening of the rupiah in the last 2 days. Rupiah as an emerging market currency with high yields is very sensitive to the sentiments of global market players.
When sentiment improves, the rupiah tends to strengthen, and vice versa.
The improving sentiment of market participants occurs because the Omicron corona virus will only cause mild symptoms, not as severe as other variants. As a result, global stock markets have shot up since yesterday, which is an indication of improving market sentiment.
“While there is still a lot of uncertainty about the impact Omicron will have on health and the economy, investors are welcome to news from South Africa where the surge in Omicron infections has not been accompanied by a significant increase in hospital occupancy rates,” said Rodrigo Catril, strategist at National Australia. Bank (NAB), as reported by CNBC International, Tuesday (7/12).
The United States (US) leading infectious disease expert, dr. Anthony Fauci said that the initial indications of infection cases due to the new variant of the corona virus B.1.1.529 or Omicron were no more dangerous than other variants.
“While it’s too early to really make a definitive statement about it, so far there doesn’t seem to be a major degree of severity,” Fauci said, quoted by Al Jazeera.
“So far, the signal is a bit encouraging. But we really have to be careful before we make any decisions that it’s not too severe, or it really doesn’t cause severe disease, like Delta,” he added.
On the other hand, the US dollar is also not expected to strengthen further. This is because market players are now anticipating the acceleration of the tapering of the US central bank (The Fed) and the possibility of two interest rate hikes next year.
“While Powell’s remarks were somewhat hawkish and sparked speculation of two rate hikes next year, the market was anticipating that,” said Jane Foley, chief currency strategist at Rabobank London.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)