Rupiah strengthened so far this week against the United States dollar (US) posted a gain of 3.42%. The rupiah also recorded a four-week winning streak. And of course, the rupiah also strengthened throughout April. No half-hearted, the strengthening reached 9.05%. It’s the best monthly performance since December 2008 (9.21%).

This performance is certainly inversely proportional to March when it experienced a turmoil until the rupiah touched the weakest level since the 1998 monetary crisis. Coronavirus (Covid-19), which became a global pandemic, and has infected Indonesia triggered a global panic, so investors pulled their funds from emerging market countries.

On March 23, the rupiah touched the weakest intraday level of Rp16,620/USD, almost reaching the weakest level of all time Rp16,800/USD touched on June 17, 1998. The collapse of the rupiah in March was able to be countered in April, although it still could not reverse all of its weaknesses.
 
However, the rupiah ran fast alone this month, the majority of Asian currencies did strengthen against the US dollar, but the majority of the strengthening is still below 1%. The Taiwan dollar, which is the second-best performing currency in Asia, has gained only 1.6% this month, far below the rupiah.

Rupiah Deserves as The Best Performance in The World Throughout April

The performance of the rupiah so far this month is also much better than the European currency, the British pound only strengthened 1.4% against the US dollar, Swedish krona 1.23%, the euro and Swiss franc weakened by 0.47% and 0.46%. 

So that the rupiah deserves the status of the currency with the best performance in the world throughout April. Not only that, Asian and European currencies were also sharply weakened by the rupiah in April, further emphasizing the unparalleled rupiah in April.

The global panic that began to subside, as well as improving market sentiment makes the rupiah strong. Governor of Bank Indonesia (BI) Perry Warjiyo, last week said the peak of global panic due to the COVID-19 pandemic had passed, its peak in the second week of March.

This is commonly seen from the global volatility index (VIX) before covid-19 reaches 18.8. And in March it reached 83.2, while currently in the range of 43. This week, the volatility index fell even further, below the level of 40, even touched 30.54 on Tuesday.

The Rupiah Exceeded BI Prediction At 15,000/USD at The End of Year

Bank Indonesia predicted the rupiah will be at Rp15,000/USD by the end of this year misses. This level has even been passed quite far last Thursday. As mentioned on, the rupiah last March experienced turmoil until its value dropped to Rp16,620/USD, the weakest level since the 1998 monetary crisis. 

Since then, BI has launched various policies to stabilize the rupiah exchange rate. BI Governor Perry Warjiyo has repeatedly assured the rupiah market to be at Rp15,000/USD at the end of the year. Including when describing the Latest Economic Development on Wednesday (29/04) this week.

BI routinely provides the latest updates on domestic economic conditions since the financial market experienced turmoil in March. In previous weeks Governor Perry provided an update on Tuesday and Thursday at 14:00 WIB but entered the fasting month, conducted once a week on Wednesday, and starting at 8:30 WIB.

The weakening of the rupiah on Tuesday was said to be a result of high foreign exchange demand at the end of the month, as well as technical factors, and BI was still confident that the rupiah would reach Rp15,000/USD later this year.

"First, from the fundamental side, which is Rp15,400/USD is currently undervalued. Because the current account deficit is lower than we estimated at 2.5-3% of GDP. In Quarter I-2020 it was below 1.5% of GDP and at the end year can be under 2% of GDP," Perry said.

"So that if the CAD [current account deficit] is lower then, the foreign exchange needs are much lower and this supports the strengthening of the exchange rate in the fundamental direction. Besides technical factors such as risk premiums will be pushed stronger than Rp 15,400 / USD," Perry added.

Furthermore, Perry said, going forward the flow of foreign capital will also continue to enter the money market. Especially if later the pandemic has subsided, so that it will continue to strengthen, in the direction of Rp15,000/USD. Only a day later, the rupiah immediately shot past the BI year-end target.