United States Pessimistic, Rupiah Increased Thinly On Friday

JAKARTA - The rupiah exchange rate on the spot market opened stronger this weekend. The rupiah opened on Friday, August 28, strengthening 5 points or 0.03 percent to the level of Rp. 14,655 per US dollar (US).

Monex Investindo Futures Head of Research, Ariston Tjendra said, the Governor of the US Central Bank, Jerome Powell, in his speech at a meeting of world central bank officials gave virtually a dovish or pessimistic picture of the US economic condition.

"Powell wants to push US inflation beyond the current inflation target of above 2 percent. This indicates that the Fed will issue a more aggressive monetary easing policy to help restore the US economy. This attitude supports the weakening of the US dollar exchange rate," Ariston told VOI.

But on the other hand, he continued, his statement was captured by market players that inflation in the US in the future will be higher than today. Rising inflation usually encourages the strengthening of the exchange rate so that overnight the US dollar strengthens against other exchange rates.

"The overall attitude of the central bank will provide positive sentiment in the future for risky assets because it provides a stimulus to the market to boost inflation and help economic recovery in the US," he explained.

However, the overnight market reaction to the strengthening US dollar might carry over to Asian markets this morning which could put pressure on emerging market exchange rates.

"The rupiah may be under pressure at the start of trading against the US dollar and may strengthen at the end of trading with the above sentiment," he explained.

Until 09:00 WIB, most currencies in Asia seemed to strengthen. The Philippine peso managed to become the currency with the biggest gain after gaining 0.24 percent.

Followed by the Chinese yuan which rose 0.19 percent and the Taiwan dollar which rose 0.15 percent. Next there was the Thai baht which appreciated 0.10 percent. Followed by the Singapore dollar, which strengthened 0.07 percent against the US dollar.

Furthermore, there is the South Korean won which rose 0.01 percent and the Hong Kong dollar which is moving stable with a tendency to strengthen after rising 0.001 percent this morning.

Meanwhile, the Japanese yen was the currency with the deepest weakness after dropping 0.20 percent. The Malaysian ringgit is also in the red zone after weakening 0.13 percent against the US dollar this morning.