Bank Indonesia said the weakening of the rupiah so far this year was 0.42% lower than other emerging market countries. The rupiah weakened at the opening of trading today.
The rupiah weakened after the Fed's interest rate hike boosted the greenback against global currencies. Bloomberg noted that the rupiah currency was Rp. 14,333 per USD or weakened by 31.5 points or 0.22 percent.
Quoted from Antara, Friday, March 19, 2022, the dollar index, which measures the greenback's strength against six other trading currencies, was down 0.5 percent at 97.980 and hit its lowest level in a week. The index remains up 2.4 percent for the year so far.
Yahoo Finance launched the rupiah currency at Rp. 14,285 per USD. Bank Indonesia (BI) said that the rupiah exchange rate was quite strong in response to various global dynamics that had occurred recently, especially from the wars between Russia and Ukraine.
Despite weakening this year, the rupiah is stronger against the US dollar than several other Asian currencies. BI Governor Perry Warjiyo said the rupiah had depreciated 0.42% from the end of last year until March 16, 2022.
Rupiah Weakening Lower Than Other Currencies
However, this weakening was lower than the Malaysian ringgit which fell 0.76%, Indian rupee 2.53%, and Philippine peso 2.56% in the same period. This is because America's domestic condition is currently struggling to fight inflation and the various responses taken by the Fed.
This shows that exchange rate developments are more influenced by fundamental factors of the Indonesian economy than technical factors of global financial market uncertainty, including the escalation of geopolitical tensions between Russia and Ukraine.
The war in the two ex-Soviet Union countries has pushed up the US Treasury and affected the perception of risk. Even so, the ability of the rupiah not to fall too deep also seems to be inseparable from the condition of the US dollar, which is not as strong as before.
Perry said geopolitical tensions were not the only sentiment that moved the rupiah but also influenced the fundamental condition of the domestic economy. Mention many positive factors from within the country that make the rupiah even tend to appreciate.
Perry also said that the impact of the wars between Russia and Ukraine can be seen in two ways, namely direct and indirect. He said the direct impact was not considered significant because Indonesia's trade relations with the two countries were limited.
Rupiah Exchange Rate Moving Data in the Market
But we also see indirect implications due to the slowdown in global economic growth and rising commodity prices. This price increase will certainly affect financial conditions and domestic prices, said Perry.
However, Perry assessed that this indirect impact also still depends on the policies taken by the government in responding to the price spike. BI is committed to continuing to coordinate with the government to see what steps should be taken regarding this challenge.
Like Perry, Minister of Finance Sri Mulyani separately said that even though it has the potential to be affected by the war, the Indonesian economy is considered strong enough to respond to the uncertainty that has been seen since the last few weeks.
Sri Mulyani revealed data that the Composite Stock Price Index or JCI during the period from February 25 to March 11, 2022, or since the start of the war, moved positively with a strengthening of 0.5%, and on a calendar year basis, it strengthened 5.2% (YTD).
During the same period, the rupiah also strengthened 0.4% against the US dollar. Meanwhile, several neighbouring countries' currencies weakened during the war period, except for the Malaysian ringgit which could still strengthen by 0.2%. The Thai baht fell 2.5% along with the Singapore dollar 0.7%, the Philippine peso 1.8%.
