Jakarta –
The United States (US) dollar exchange rate has continued to strengthen against the rupiah recently. Uncle Sam’s currency was at the level of IDR 14,670 at the end of April 2023, but has now touched IDR 15,610 as of October 6 2023.
Money market observer Ariston Tjendra believes that the strengthening of the US dollar cannot be separated from the US benchmark interest rate policy this year. Moreover, US monetary policy is of concern to global market players.
“The US benchmark interest rate policy is the main trigger for the strengthening of the US dollar this year. Coincidentally, US monetary policy is of concern to global market players,” he said to detikcomSaturday (7/10/2023).
“The US dollar influences global transactions. Global foreign exchange payment transactions using US dollars are still high at around 46% according to Swift data, compared to other exchange rates. Apart from that the US dollar also holds around 60% of global foreign exchange reserves. So the world’s dependence on the US dollar is still high ,” he continued.
He said that an increase in the US benchmark interest rate would push up US government bond yields. US government bonds have become a safe investment asset that attracts market players.
“Market players certainly prefer to invest in safe assets rather than risky assets if they produce more or less the same returns, so that the US dollar strengthens. Expectations of high interest rate policies are still supported by the condition that the US Central Bank is still concerned about the US inflation rate which is still “it has not fallen to the target level of 2%,” he explained.
Apart from that, the issue of the global economic slowdown with high inflation due to high interest rate policies, the debt crisis and the Russia-Ukraine war also gave negative sentiment to risky assets such as the rupiah and pushed market players into safe assets such as the US dollar.
Likewise, Director of PT Laba Forexindo Berjangka, Ibrahim Assuaibi, said that the strength of the US dollar against the rupiah could not be separated from the US interest rate policy. He predicts the US central bank will raise interest rates in November. Apart from that, the strong US labor market also has a positive impact on the US dollar.
“In November, the US central bank raised interest rates. On the other hand, last night’s employment data unexpectedly experienced a significant increase, this made the dollar immediately fly. Well, this increase in employment indicates that the US central bank is likely to maintain interest rates high and raising interest rates,” explained Ibrahim.
Money market analyst Lukman Leong agrees because the US government is likely to maintain or raise high interest rates. The strengthening of the US dollar is likely to occur until the end of 2023 or early 2024.
“The strengthening of the US dollar is generally caused by increasing expectations regarding the interest rate prospects of the US central bank, the Fed, whether it will continue to raise interest rates again or hold high interest rates for a longer period of time,” he concluded.
(ily/ara)
2023-10-07 08:45:10
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