Rupiah Exchange Rate Is Weakening To IDR14.470 Earlier This The Week, Impact Of The Fed's Policy Speculation

JAKARTA - The rupiah exchange rate that was transacted between banks in Jakarta at the beginning of the week weakened due to speculation that the US central bank The Fed will tighten its monetary policy.

The rupiah opened down 25 points or 0.17 percent to IDR 14.470 per US dollar compared to the position at the previous closing trade of IDR 14.445 per US dollar.

"The outlook for the US dollar strengthens as optimistic US economic data has recently sparked speculation that the US central bank could tighten its monetary policy", wrote the Monex Investindo Futures Research Team in a study quoted from Antara, Monday, May 3.

The dollar index, which measures the strength of the dollar against other currencies this morning, was in the position of 91.3, up from the previous closing position of 91.28.

Meanwhile, the yield on 10-year US bonds is currently at the level of 1.626 percent, down from the previous closing position of 1.631 percent.

The yield on the 10-year US bond fell to a level of 1.63 percent at the end of last week following the release of personal income and expenditure data in March which rose 21.1 percent and 4.2 percent, respectively.

Meanwhile, the Personal Consumption Expenditure (PCE) Price Index rose 0.5 percent, while the core PCE Index, which excludes food and energy, is up 0.4 percent on month.

PCE is an inflation metric that the Federal Reserve is closely watching, with Fed Governor Jerome Powell warning earlier last week that the PCE may show a temporary rise in prices.

However, the worsening of the global COVID-19 cases, especially in India, is considered to be still overshadowing the financial markets.

On Friday (30/4), the rupiah closed slightly higher by 5 points or 0.03 percent to IDR 14.445 per US dollar compared to the position at the previous closing trade of IDR 14.450 per US dollar.