Ahead of the Fed's Decision, Rupiah Weakens

The Indonesian Rupiah weakened 0.11% against the US dollar in the spot market, closing at Rp 14,020 on Monday (July 29th). The expectation that US economic growth will fall short of market predictions increases the likelihood of the US Federal Reserve (The Fed) significantly cutting its benchmark interest rate.

In the second quarter of 2019, US economic growth is predicted to reach 2.1%. This is lower than the 3.1% growth recorded in the first quarter of 2019.

If The Fed cuts its benchmark interest rate as a stimulus for the US economy, the US dollar is predicted to strengthen against several world currencies, including the Rupiah. Besides this sentiment, Rupiah transactions are also influenced by the effects of the US-China trade war and signals of a benchmark interest rate cut in Europe by the ECB.

(Read Databoks: [BI Lowers Benchmark Interest Rate, Rupiah Strengthens at the Weekend])