Rupiah Nears Rp 14,500 per US Dollar

The appreciation of Asian currencies managed to support the movement of the rupiah at the end of this week. As a result, the rupiah exchange rate on Friday (29/6) trading until 2 PM WIB strengthened slightly by Rp 34 to the level of 14,360/US dollar from the previous day's closing at Rp 14,384/US dollar. However, compared to the end of 2017, the rupiah exchange rate has weakened by 6.19%.

Negative sentiment from global and domestic factors caused the exchange rate to weaken. From external factors, the market's concerns about the US-China trade war and the potential for a Fed interest rate hike caused the US dollar to appreciate against major world currencies and regional currencies. As a result, the rupiah exchange rate plummeted to its lowest level since October 7, 2015. In the Jakarta Interbank Spot Dollar Rate (JISDOR), the rupiah exchange rate even reached Rp 14,404/US dollar. For three-month Non-Deliverable Forward (NDF) transactions, the rupiah exchange rate was traded at Rp 14,560/US dollar.

From domestic factors, the trade deficit, which reached US$2.83 billion until May 2018, and the current account deficit of US$5.5 billion until the first quarter, caused a shortage of US dollars domestically. On the other hand, the outflow of foreign funds from the capital market and bonds increased the demand for US dollars. This caused the rupiah to weaken significantly.