Aashvicorporation. The exchange rate of the Indonesian Rupiah against the US Dollar started the trading day on Monday, September 25, 2023, with a slight depreciation. According to data from Bloomberg, the Rupiah opened 17 points weaker or 0.11 percent lower at Rp15,392 per US Dollar. In contrast, the US Dollar Index strengthened by 0.02 percent, reaching 105.60. Meanwhile, other currencies in the Asian region showed mixed trends. The South Korean Won gained 0.11 percent, the Japanese Yen weakened by 0.03 percent, and the Chinese Yuan depreciated by 0.06 percent. The Indian Rupee strengthened by 0.19 percent, the Malaysian Ringgit gained 0.10 percent, the Thai Baht weakened by 0.03 percent, and the Philippine Peso strengthened by 0.04 percent.
Previously, Ibrahim Assuaibi, Director of PT Laba Forexindo Berjangka, commented on several factors influencing the movement of the Rupiah. One of these factors is the decision of the Bank of Japan (BOJ) to maintain its short-term interest rates at negative 0.1 percent. “BOJ cited increased uncertainty in the Japanese economy, particularly due to the weakness of its largest trading partners, as the main reason for maintaining its stimulus policy,” Ibrahim said in his research.
He continued by mentioning that the BOJ also stated its intention to target higher wage growth and aim to help inflation reach its annual target of 2 percent. This decision was made shortly after data showed that Japan’s Consumer Price Index (CPI) inflation grew slightly higher than expected in August. Meanwhile, in the United States, the Federal Reserve (The Fed) kept interest rates stable for the week but warned that high inflation could lead to at least one more interest rate hike later this year. The Fed also estimated the likelihood of keeping interest rates above 5 percent until 2024, disappointing market expectations for at least four interest rate cuts next year.
Regarding domestic factors, Ibrahim mentioned that sentiment was influenced by the decision of the Bank of Indonesia (BI) to maintain the BI 7-Day Reverse Repo Rate at 5.75 percent. This decision aligns with the central bank’s monetary policy stance to ensure low and controlled inflation. With these unchanged interest rates, the exchange rate of the Rupiah against the US Dollar remains more stable than other currencies. However, the Rupiah has still depreciated by 0.98 percent compared to August 2023.
Looking ahead, the stability of the Rupiah’s exchange rate is projected to be maintained in line with positive investor perceptions of Indonesia’s economic prospects, low inflation, and attractive domestic financial asset yields. For today’s trading, Ibrahim predicts that the Rupiah will fluctuate but ultimately close with a slight gain in the range of Rp15,360 to Rp15,410 per US Dollar.
