BI: Sinyal Hawkish The Fed Picu Pelemahan Rupiah

Bank Indonesia (Photo: Antara)

JAKARTA - Bank Indonesia (BI) explained that the weakening of the rupiah exchange rate, which had touched the level of Rp18,000 per US dollar (USD), was influenced by the strengthening of global sentiment, especially after the emergence of hawkish signals from a number of Federal Reserve (Fed) officials who encouraged the strengthening of the US dollar.

Head of the BI Communication Department, Ramdan Denny Prakoso, said the statements of Fed officials indicated that the Fed Funds Rate (FFR) benchmark interest rate could potentially remain high until the end of the year.

According to him, this condition triggered the strengthening of the US dollar index (Dollar Index/DXY) which at the end of June was at the level of 101, the highest in the past year.

"So the combination of hawkish signals from Fed officials and also followed by the rise in DXY to the highest level in the past year is what makes the exchange rate of a number of countries weaken against the US dollar," he told the media, Tuesday, July 7.

Denny explained that the weakening was not only experienced by the rupiah, but also occurred in various other emerging market currencies.

Based on BI data, the Russian currency was the most depressed with a weakening of around 5.5 percent, followed by the Chilean peso by 4 percent, the Thai baht by 2.3 percent, and the rupiah which weakened by around 1.4 percent.

Meanwhile, the South Korean won and the Philippine peso depreciated by about 1 percent, the Indian rupee weakened 0.7 percent, while the Chinese renminbi fell about 0.5 percent against the US dollar.

However, Denny emphasized that BI would continue to take various steps to maintain the stability of the rupiah exchange rate.

He added that interventions were carried out both in the domestic and international markets through transactions in the spot market, Non-Deliverable Forward (NDF), Domestic Non-Deliverable Forward (DNDF), as well as intensive communication with market participants.

"Bank Indonesia as usual will be all out. Then both in the foreign market and in the domestic market with transactions in the spot market, in the NDF market, in the DNDF market and also conducting intensive communication with market participants," he said.

According to Denny, compared to other emerging market currencies, the performance of the rupiah is still relatively better, and BI is optimistic that the rupiah exchange rate can strengthen again and move more stably as the synergy of various parties' policies strengthens.

"Therefore, of course, the synergy of various parties is very necessary to bring our rupiah to strengthen against the US dollar," he added.

For information, on Tuesday, July 7, the spot rupiah closed at the level of Rp17,980 per US dollar (USD) or strengthened 0.08 percent compared to the previous day's closing at the level of Rp17,995 per US dollar.

In addition, the movement of the rupiah was opened to weaken 0.03 percent to the level of Rp18,000 per US dollar. However, the rupiah then began to strengthen to the level of Rp17,980 per US dollar at 09.23 WIB.

Meanwhile, a day earlier, the rupiah also touched the position of Rp18,006 per US dollar in intraday trading at around 14.15 WIB.