Currency War Scars, Rupiah Exchange Rate Further Eroded

The Indonesian Rupiah weakened against the US dollar in the spot market to Rp 14,305/US dollar at the opening of trading on Tuesday (August 6th). This weakening has occurred since the beginning of August 2019, particularly after the US Federal Reserve (The Fed) cut its benchmark interest rate by 25 basis points.

Furthermore, there was negative sentiment caused by the devaluation of the Chinese Yuan against the US dollar. On Monday (August 5th), the Yuan exchange rate against the US dollar reached its lowest level in 11 years at 7 Yuan per US dollar. The Rupiah also weakened by 0.53% to Rp 14,255/US dollar. The devaluation of the Chinese Yuan is a sign of increasing tensions in the US-China trade war.

US President Donald Trump accused China of manipulating its currency to make its exports more competitive. This strategy is China's response to the US threat to impose a 10% tariff on US$300 billion worth of Chinese imports on September 1st, 2019.

(Read Databoks: [Here's the Movement of the Yuan against the US Dollar Since 2008](https://databoks.katadata.co.id/datapublish/2019/08/06/inilah-pergerakan-yuan-per-dolar-as-sejak-2008))