Jakarta, CNBC Indonesia – The rupee strengthened strongly at the end of trading today, Wednesday (10/5/2022). The rupee was at the level of Rp 15,190 / US $, strengthening 0.36% on the spot market.
Bank Danamon economist Irman Faiz explained that the strengthening of the rupee only happened today, since Bank Indonesia (BI) last announced the results of the board of governors meeting by raising the benchmark interest rate to the 4.25% on 22 September 2022.
Faiz said the rupee was fundamentally much better than other currencies. The direction of future strengthening depends on the monetary policy response.
“If BI raises interest rates again by 5.25% by the end of the year, the rupee could strengthen towards Rp. 14,820 / US $ by the end of this year. Meanwhile, we see today that the index of the dollar weakens, so this is a factor that helps the rupee strengthen, “Faiz explained to CNBC Indonesia on Wednesday (10/5/2022).
Global Markets Economist Bank Maybank Indonesia Myrdal Gunarto explained that the rupee’s strengthening today is due to the absence of main event in the United States it lit technical rebound non-dollar currency. In addition, Indonesia’s latest inflation figures have not been as high as expected.
“Inflation in September 2022 is still below 6% (year over year), thus encouraging global investors to re-enter the domestic financial market,” Myrdal told CNBC Indonesia.
However, until the end of December 2022, according to Myrdal, the rupee has the potential to strengthen to the 14,600 rupees / USD level, driven by a sizeable trade balance surplus. influx in financial markets after the sentiment of rising global interest rates and recession has been price inAnd foreign direct investments.
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The same thing was also expressed by BCA chief economist David Sumual. He said that the rupee’s strengthening was caused by external factors that had a stronger influence. However, unlike the two previous economists, David estimates that the rupee will be very small to return to the exchange rate of Rp 14,000 / US $.
“Especially after the Fed confirmed at a conference in Jackson Hole that the Fed will continue to raise interest rates. It is unlikely to return to the rate of Rp 14,000,” David explained.
The US dollar index fell 1.5% to 110.06 in trading on Tuesday. In 5 days, trading collapsed 4 times for a total of 3.5%.
The decline in the US dollar index followed the trend in US Treasury yields. Many analysts see the decline in relation to both expectations and the Fed’s (US central bank) interest rate views.
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