The rupiah exchange rate against the United States (US) dollar moved lower this week. Rupiah is in line with major Asian currencies which are also helpless against the greenback.

Yesterday, the rupiah closed the spot market trading at Rp. 14,385/US$. So, throughout this week, the rupiah weakened 0.14% against the currency of Uncle Sam's country. However, the rupiah is not alone because various major Asian currencies have the same fate.

The Chinese yuan weakened 0.18%, the Indian rupee depreciated 1.8%, the South Korean won weakened 1.66%, the Taiwan dollar weakened 0.57%, the Thai baht weakened 0.74%, the Singapore dollar weakened 0.46% and the Hong Kong dollar weakened 0.06%.

This week, the Dollar Index (which reflects the greenback's position against six major world currencies) rose 1.96% to its highest since May 2020.

The cause is the war in Ukraine. Russia's attack on the country has entered its second week. Russian troops have seized control of a nuclear power plant in Ukraine, which is the largest in Europe.

There Are Several Factors That Affect the Movement of The Rupiah

The Red Bear Country Army has surrounded the city of Mariupol in southeastern Ukraine. The siege of the Russian army deprived the city of access to clean water, electricity, and food.

This development makes investors just playing it safe, reluctant to take risks. Therefore, safe-haven assets such as the US dollar are an option.

The attitude of market participants who are still risk-off has the potential to make the rupiah exchange rate depressed on Monday. The external sentiment is still the driving force.

Bank Permata Chief Economist Josua Pardede said that currently the United States (US) dollar index is still in an upward trend and has managed to penetrate the 98 level, due to the Russia-Ukraine conflict. In addition, there is an increase in the demand for safe-haven.

This indicated an increase in the price of gold to the US $ 1,946 per ounce troy. In Monday's trading, market participants will keep a close watch on Russia-Ukraine developments, said Joshua.

US employment data will also affect the rupiah. In February, US non-farm payrolls hit 678,000, the highest since July 2021. This is well above the analyst consensus of 400,000. The US unemployment rate also fell to 3.8%, its lowest since February 2020.

Russia-Ukraine Tensions Still Continue

This was lower than the analyst consensus projection of 3.9%. Josua said, this week, market participants will pay close attention to the FOMC meeting. However, he assessed that market participants have been priced in with a potential increase in the Fed's interest rate of 25 bps.

Monex Investindo Futures analyst Andian Wijaya added that the rupiah has the potential to weaken in line with fears of rising fuel prices. Understandably, the Russia-Ukraine conflict has triggered an increase in energy commodity prices and could suppress Indonesia's short-term imports.

Andian predicts that the rupiah exchange rate on Monday will weaken and move in the range of Rp 14,330 - Rp 14,500. Josua estimates that the rupiah will move between Rp. 14,350-Rp. 14,450 per US dollar.

Monex Investindo Futures analyst Andian Wijaya said the rupiah has the potential to weaken in line with concerns about rising gas and fuel prices at this time. Understandably, the Russia-Ukraine conflict has triggered an increase in the prices of these two energy commodities, which can reduce Indonesia's imports in the short term.

Meanwhile, US NFP data for the whole of February 2022 reached 678,000, or the highest since July last year. This figure is also above the market consensus of 400,000.

Not only NFP data, but the US unemployment rate in February 2022 was also solid, at 3.8% or the lowest since February 2020. This figure is also much lower than the market consensus projected at 3.9%.