Rupiah in the middle exchange rate of Bank Indonesia (BI) weakened slightly in trading Wednesday (6/5). At 10.00 WIB, the rupiah was at Rp15,127 per United States Dollar in Jakarta's Interbank Spot Dollar Rate, down 0.15% from the previous day at Rp15,104 per USD.
Rupiah in the middle rate of BI is in line with rupiah in the spot market. At 10:04 WIB, the rupiah on the spot market was Rp. 15,119 per US dollar, down 0.25% from the previous day at Rp. 15,080 per US dollar.
The rupiah led the weakening of the Asian currency against the USD. Followed by the Taiwan Dollar which fell 0.19%, the Korean Won weakened 0.17%, the Singapore Dollar weakened 0.07%, the Malaysian Ringgit weakened 0.03%, the Philippine Pesso weakened 0.03% and the Thai Baht weakened 0.02% against USD.
Meanwhile, other Asian currencies strengthened against the US dollar until 10:04 WIB, namely the Japanese Yen, Indian Rupee, and Hong Kong Dollar. The dollar index that reflects the exchange rate of the US dollar against major world currencies is at 99.79, up from the previous day at 99.70.
Various Positive and Negative Sentiments Influence Varied Predictions of Rupiah Movements
Analysts said that market sentiment was mixed today as seen from the price of risky assets, some that were positive and those that were depressed. The market is also worried about an increase in outbreaks after the easing of the lockdown.
Based on the Governor of BI, Perry Wajiyo, there’re still negative global sentiments shadowing the financial markets. Among other things, the US-China tension is heating up due to the pandemic. Perry said these sentiments were technical factors that influenced the movement of the rupiah exchange rate in the short term.
There’s also the USD exchange rate in the Non-Deliverable Forwards (NDF) market until Wednesday for 1-week period at the level of Rp15,190, 1-month at Rp15,296, 2-months at Rp15,440, and 3-months at Rp.15,600. While the Domestic NDF exchange rate at Rp 15,080 for 1-month and the 3-month period at Rp15,300.
BI Believes that The Rupiah Will Move Below 15 Thousand
Bank Indonesia (BI) predicts that the rupiah will strengthen below 15 thousand per US dollar in today's trade, Wednesday (6/5). Until 13:00 WIB, the rupiah was perched at Rp15,085 per US dollar. BI Governor, Perry Warjiyo, said the strengthening of the Garuda currency was supported by positive news from global.
In addition, the United States central bank, the Fed, estimates that United States economic growth will improve in the second half of 2020. Although, in the first quarter of 2020, the United States economic growth slowed by only 0.3 percent.
However, fundamentally, he considered the movement of the rupiah to be stable and likely to strengthen. Fundamentally, the rupiah exchange rate is influenced by inflation, the current account deficit (Current Account Deficit), and differences in domestic and foreign interest rates.
In terms of inflation, he said the figure tends to below. The Central Statistics Agency recorded April inflation of 0.08% on a monthly basis and 2.67% on an annual basis. The inflation rate was lower than the prediction, 0.18% on a monthly basis and 2.98% on an annual basis.
Meanwhile, the central bank predicts annual inflation at 3% plus-minus 1%. He said the low level of inflation due to the impact of social restrictions, such as Large-Scale Social Restrictions and Work From Home (WFH). These social restrictions affect mobility and activity, thereby reducing demand for goods and services.
Meanwhile, the current account deficit is believed to be below 1.5 percent of Gross Domestic Product (GDP) in the first quarter of 2020. Lower than the central bank's prediction of 2.5 percent-3 percent of GDP. While on an annual basis, the current account deficit is below 2 percent of GDP.
Then, the difference in interest rates at home and abroad is quite high. BI recorded a yield on Indonesia's 10-year Government Securities (SBN) of around 8 percent. Meanwhile, the yield on US 10-year bonds is 0.4 percent, so there is a difference of more than 7.5 percent.
