Rupiah opened it’s early week with a stronger position around 0.19 percent versus the US dollar. Currently, this Indonesian currency is being at the level of 14,547 in the market. 

There are some reasons of why the exchange of Rupiah is stronger than USD today. One of them is caused by the acceleration of the increase in reserve requirements by the central bank. 

Before, the Bank of Indonesia or BI accelerated their policy normalization through the increase in reserve requirement gradually. It will be started from 1 of June 2022.

In more detail, the minimum policy of that reserve will raise by 6 percent starts from that June 1st, 2022. Furthermore, it will be 9% from 1 of September 2022, and 7.5% from 1 of July this year. 

It Supports the Rupiah Strengthening 

A policy made by the Bank of Indonesia to speed up the reserve requirement increase for the conventional general bank and Shariah supports the strengthening of Rupiah. 

That is why; this currency starts to away from IDR 14,700 per United States Dollar. This was informed by an analyst from Indonesia, Mr. Revandra Aritama met on an occasion sometimes ago. 

The USD was affected by the decreasing optimism of Fed Hike. At the same time, that major currency moved to it’s monthly decline for the first time in 5 months period. How is it possible? 

This situation was caused by the fading expectation of the Fed interest rate increase expectation. It is especially after the release of Gross Domestic Product data or GDP in America. 

The US GDP Report Is Getting Worse

Based on the data, the release explained above is even worse than a market expectation. People expected that it may reduce the decline speed from -1.4% to around -1.3%. However, it was not happened. 

For your information, the America’s GDP for quarter I / 2022 slowed down and touched the level of -1.5%. It was not only to dollar, but this dynamic change also has an impact on the America’s Obligation Yield. 

Based on an information, that got close to the lowest record in two months. Due to this condition, an expert gave his opinion. Ariston Tjendra from Indonesia said that market participants moved their strategy. 

They decided to try some possibilities in several risky assets such as Rupiah. Further more, a concern about global COVID-19 cases is getting less than before 

The Fed Interest Rate Issue is Ignored 

What is happened now is that an ignorance attitude showed by the market. People seemed ignore an issue about The Fed interest rate incresse for a while and do something different.

People decided to take a chance in several risky assets by entering the Low level. Before, USD tried to move from it’s lowest position in a month which was touched some days ago. 

Furthermore, the rally of euro stopped around the level of 1.07 to Greenback. When this nees was written, DXY has been raised up to 0.36% up to the level of 102.13.

This was occured amidst the market situation which awaited for a sequence of essential economic data release from USA. This makes market participants are more carefull.

Lagarde and Her Hawkish Opinion

What happened in the market is that Christine Lagarde who also participated a hawkish attitude. She said some days ago that the interest Rate may be positive at the end of the third quarter. 

She also added that for this time she doesn’t see any recession in Euro area. That statement is like a sign of minimum 50 basis point increase for the ECB interest rate. 

That may be happened as soon as possible. Before, some ECB representatives have gave the similar sign which makes most participants were more believe at this prospect in the future.