The rupiah strengthened to Rp14,463 against the US dollar this morning, from Rp14,520 on Friday last week. The local currency had been fairly stable against the US dollar since central bank (Bank Indonesia/BI) aggressively raised its benchmark interest rate, the BI 7-day repurchase repo agreement, by 0.5% to 5.25% in late June, a move that caught many by surprise.

However, after BI decided to leave its benchmark interest rate unchanged at the July policy meeting, which was concluded on Thursday (July 19). The rupiah has become under heavy pressure again Friday last week, to weakest level since October 2015.

BI revealed that pressures on the Rupiah re-emerged as uncertainty enveloped the global financial markets, which triggered broad US Dollar appreciation. Darmin Nasution, Coordinating Minister for Economy, also said the rupiah depreciation at current level is caused by two external factors; trade tension between US and China which prompting advanced countries to normalizing their monetary policies, and sentiment from further Fed rate hike.