Rupiah Has A Possibility To Continue Strengthening As US Bond Yield Drops

An employee shows rupiah and US dollars at a bank in Jakarta. (Photo: Aprillio Akbar/Antara)

JAKARTA - The rupiah exchange rate transacted between banks in Jakarta on Tuesday has the opportunity to continue strengthening at the beginning of last week, as the yield of United States (US) bonds fell.

At 9.34 a.m. local time, the rupiah strengthened seven points or 0.05 percent to the position of IDR 14.258 per US dollar compared to the position at the close of the previous trade of IDR 14.265 per US dollar.

Money Market Observer Ariston Tjendra in Jakarta, Tuesday, said that the rupiah may strengthen again today because the yield on the 10-year US bond is still visible. Pressing downwards, which is around 1.57 percent at the moment.

"The decline in yields is because the market expects that the US central bank will not taper after the US employment data, non-farm payrolls for May, showed results that were below expectations", Ariston said, quoted by Antara.

The market is waiting for the US consumer price index data for May 2021 which is an indicator of inflation, which will be released on Thursday, June 10 evening, to determine the next price direction. A figure that is above expectations could push back the strengthening of the US dollar.

According to Ariston, consistent inflation data showing an increase of more than 2 percent could trigger the US central bank to change its policy to become more stringent.

From within the country, data on foreign exchange reserves will be released today which may show an increase in reserves due to Indonesia's trade balance surplus.

"The increase could support the strengthening of the rupiah against the US dollar", said Ariston.

Ariston said today the rupiah has the potential to strengthen to the range of IDR 14.230 to IDR 14.200 per US dollar with the potential for weakening in the range of IDR 14.300 per US dollar.

The rupiah closed up 30 points or 0.21 percent to a position of IDR 14.265 per US dollar compared to the position at the close of the previous trade of IDR 14.295 per US dollar.