In Emerging Markets, Rupiah Weakening Ranks 10th

The threat of interest rate hikes by the US Federal Reserve (The Fed) and concerns over a global trade war have strengthened the dollar against major world currencies. This has weakened emerging market currencies throughout the year, including the Indonesian Rupiah. In the spot market (June 29th) until 10:50 WIB, the rupiah exchange rate was traded at Rp 14,384/US dollar, while the Jakarta Interbank Spot Dollar Rate (JISDOR) was at Rp 14,404/US dollar.

Bloomberg data shows that the rupiah's year-to-date (YTD) return in the spot market against the US dollar for the period (December 29, 2017 - June 28, 2018) fell by 5.71%. This places the rupiah among the 10 emerging market currencies that experienced the deepest weakening. This position is below the Philippine peso, which depreciated by 6.74% against the US dollar.

Meanwhile, the country experiencing the deepest weakening was Argentina, with its peso falling by 33.71% (YTD), followed by the Turkish lira down 17.15% and the Brazilian real down 14.3%. Increased global uncertainty has led to increased financial market volatility. This is reflected in the volatility index (VIX) rising to 16.85 on June 28, 2018, from its year-end position of 11.04. Similarly, the US dollar index against major world currencies (DXY) rose to 95.27 compared to its year-end position of 92.12.