The exchange rate of the rupiah against the US dollar moved lower in trading on Wednesday 16th June, with the sentiment due to the increase in COVID-19 cases in the country.
Quoting Bloomberg, the rupiah opened at 14,235 per USD, weakening slightly when compared to the previous trading close of 14,225 per USD. By noon yesterday, the rupiah continued to be under pressure and was as 14,262 to the dollar.
From morning until noon, the rupiah has moved in the range of 14,235 to 14,262 per USD. Working from the beginning of the year means the rupiah has weakened 1.25 percent.
“The rupiah exchange rate may still be under pressure today ahead of the announcement of the results of the US central bank’s policy meeting this morning at 1am,” said money market analyst Ariston Tjendra in Jakarta.
According to Ariston, the market is wary of the possibility that the Fed will start discussions about reducing US bond purchases as a form of monetary tightening due to the sharp rise in inflation in the US.
“This encourages the strengthening of the US dollar against other exchange rates, including the rupiah,” said Ariston.
In addition, the increase in COVID-19 cases, which has triggered alert one in a number of regions in the country, has also put pressure on the rupiah. “Tightening economic activities due to this increase in cases could hamper the ongoing economic recovery,” said Ariston.
On the other hand, he continued, Indonesia’s trade balance surplus, which is in line with expectations, could help curb the weakening of the rupiah.
The Central Statistics Agency (BPS) reported that Indonesia’s trade balance in May 2021 again experienced a surplus of US$2.36 billion, with a total export value of US$16.60 billion and imports of US$14.23 billion, the highest in 2021.
Ariston said the rupiah has the potential to weaken to the range of 14,270 per US dollar with the potential to strengthen in the region of 14,200.
On Tuesday 15th June, the rupiah closed down 22 points or 0.16 percent to 14,225 per USD compared to the position at the previous close of 14,203 per USD.