BI Reveals Several Factors That Weaken Rupiah

Rupiah illustration (Photo: dock. Antara)

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo raised his voice regarding the rupiah exchange rate had fallen, almost reaching Rp. 16,000 per US dollar last week.

"The development of any price, either inflation or exchange rate, is always influenced by two main factors, namely one fundamental factor is supply demand, the second is news," Perry said at the KSSK press conference in the First Quarter of 2024, Tuesday, January 30, 2024.

According to Perry, the weakening of the rupiah exchange rate is only temporary or in the short term and is driven by the news circulating.

In the short term, there are news factors. One to two weeks ago there was news, which affected the order of the rupiah exchange rate, and not only the rupiah but the whole world," he explained

Perry detailed what news pushed for the weakening of the rupiah, namely from market predictions related to the Central Bank of the United States (US) The Federal Reserve (The Fed) will cut the benchmark interest rate in the first semester of 2024.

But by looking at the current situation, such as core US inflation which has not dropped below the target, the confidence in the market has faded.

Furthermore, strengthening the US dollar index against other countries' currencies (DXY) had dropped to 102. But now it has gone up even more than 103.

Then, news related to global geopolitical excalation, not only in the Middle East, but also in conflicts in the South China Sea that are driving supply disruptions. As well as the Chinese regulator's policy so that the stock market does not decline too sharply, thereby stopping certain stock loans.

Perry emphasized that not only the rupiah experienced a weakening but the exchange rate in other developing countries also recorded a weakening.

In addition, Perry said the rupiah exchange rate was still fundamentally strong, supported by trade balance surpluses, low inflation, SBN yields and good stocks.