Jakarta, CNBC Indonesia – The rupee exchange rate tumbled against the US dollar last week, hitting its lowest level in 2.5 years. The pressure on the rupee is still great this week, and there is a risk that the ‘gate of hell’ will open at Rp 16,000 / US $.
According to Refintiv data, the rupee weakened by 1.15% to Rp / US $ 16,425 last week. The Garuda currency has weakened for 5 consecutive weeks.
The pressure for the rupee still comes from outside. The US central bank (The Fed) which will continue to aggressively raise interest rates, and the issue of a global recession are the perfect combination that makes the US dollar very powerful.
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Meanwhile, nationwide this week, Bank Indonesia (BI) will announce its monetary policy on Thursday (10/20/2022). In announcing the results of the Board of Governors (RDG) meeting last September, BI surprised by raising interest rates by 50 basis points to 4.25%.
Market participants will surely wait to see if BI raises interest rates again as the rupee exchange rate continues to come under pressure. capital outflow in the bond market. If BI doesn’t raise interest rates, the rupee will almost certainly be depressed. Meanwhile, if BI Governor Perry Warjiyo and his colleagues raise interest rates again, the weakening of the rupee can be temporarily suppressed, depending on the size of the increase.
In addition, the trade balance data will be released on Monday (10/17/2022). The market consensus compiled by CNBC Indonesia from 13 institutions predicts a trade balance surplus in September of $ 4.85 billion. The surplus is much smaller than in August 2022, which reached $ 5.76 billion.
The decline occurred due to the slowdown in Chinese economic growth, as well as the slope of commodity prices. Although it is estimated that it will register a surplus of 29 consecutive months, this slowdown could be a negative sign, in the future Indonesia will no longer enjoy the ‘collapse of the durian’.
Technically, the rupee, symbolized by USD / IDR, has been under pressure since breaking out of the 50-day moving average (50 / MA50 moving average).
The 50 MA is strong resistance, so the pressure for weakening will be even greater when the rupee breaks through it. Furthermore, the rupee has also penetrated and is locked above Rp 15,090 / US $ – Rp 15,100 / US $ which is 50% Fibonacci retracement.
The Fibonacci retracement was pulled from its lowest point on January 24, 2020 at Rp. 13,565 / US $ and the highest on March 23, 2020 at Rp. 16,620 / US $.
As long as it is stuck above the 50% Fibonacci retracement, it is broken and stuck above it, the rupee is in danger of falling further.
The weakening target is Rp / US $ 15,450, which is the 38.2% Fibonacci retracement. This level can be a “gate to hell”, if the rupee enters and gets stuck above it, the risk is close to Rp. 16,000 / US $ or in the range of Rp. 15.900 / US $, which is FIb. The 23.6% retracement will increase.
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Chart: Rupee (USD / IDR) daily
Photo: Refinitivo |
Meanwhile, the daily chart’s stochastic indicator has long been in the overbought zone (overbought).
Stochastic is a leading indicator or indicator that initiates price movements. When the Stochastic reaches the territory overbought (above 80) or oversold (below 20), then the price of an instrument has the opportunity to reverse direction.
The closest support is at Rp 15,310 / US $ – Rp 15,300 / US $, if broken, the rupee has a chance to strengthen at Rp 15,240 / US $.
Strong support is in the range of Rp 15,100 / US $ – Rp 15,090 / US $ which is FIb. 50% retracement.
RESEARCH TEAM OF CNBC INDONESIA
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