Ten years ago, entering 2009 election, Indonesia recorded high inflation rate of 11.06%. That time, rupiah was Rp10,950 per USD. Rupiah has fallen to Rp15,180 per USD this time around, but inflation rate is below 3%. Why?
Read MoreThe strongest rupiah (Rp9,000 per USD) was in 2011 when WTI crude oil was traded around US$110 per barrel. The weakest, is at the moment (Rp15,180/USD) when WTI crude oil is traded only around US$75 per barrel. Why?
Read MoreThe rupiah weakened further to Rp14,930 against the U.S. dollar on Tuesday (Sep 4), falling for the fifth straight session and hitting the lowest since July 13th, 2008. So far this year, the currency has lost nearly 10% against the greenback, amid a general dollar strength, sell-off in emerging market currencies, and widening current account deficit prompted by surging imports. Year on year (y/y) the rupiah has weakened 11%, paralel with India’s Rupee (11.2% fall).
Read MoreSo, rupiah has touched its lowest level after 1997 financial crisis at around Rp15,000 per US dollar yesterday. Year-on-year, rupiah lost 11.7%, slightly weaker than India’s Rupee, which fell 11.2%, but clearly better than Turkish Lira (-88%) and Russia’s Rubel (-18%). Some said the currency might weaken further before finding its new balance. Others immediately suggesting the government to revise up the gasoline price. Should you worry?
Read MoreThe rupiah continued to weaken to Rp14,711 against the U.S. dollar on Friday last week (Aug. 31), gradually approaching a two-decade low. The rupiah depreciation is in line with the performance of most other emerging market currencies amid broad-based U.S. dollar strength, Indonesia is ranked in the top ten of hardest-hit currencies so far in 2018.
Read MoreRupiah, like currencies of emerging economies, including India and Brazil, has been under pressures in the past few years. The currency has just hit its new low, among others due to global pressures from Fed policies and downfall of key export commodities. It is true that Brent crude oil gained 48% year-on-year, but because Indonesia is net importer of oil and refined products, it has negative impact to the overall trade balance.
Read MoreThe rupiah is under pressure again on Thursday (Aug 23) in line with the overall trend of emerging market currencies.
Read MoreIndonesia recorded trade deficit of US$2.03 billion last month as import grew 31% to US$18.2 billion, while export increased by 19% to US$16.2 billion. The deficit adds pressures to the rupiah, which has been hit by broad appreciation of USD against emerging currencies in the past few months.
Read MoreThe rupiah weakened further to Rp14,625 against the U.S. dollar on Tuesday (Aug 14), extended correction on Monday, but the central bank (Bank Indonesia/BI) confirmed to have intervened the local currency. The rupiah since Monday passed beyond the psychological boundary of Rp14,600 per U.S. dollar level—its lowest level since October 2015—puts additional pressure on the Indonesian currency as it encourages more people to seek safe haven assets, such as the U.S. dollar or Japanese yen.
Read MoreGlobal markets mostly gained on Tuesday mainly supported by a rally in oil prices, but persistent trade war concerns still weigh on sentiment. Strong earnings also helped gains in Wall Street and European stock markets.
Read MoreWeak rupiah makes Indonesian export products more competitive on the global market. But when the content of those export products has a high degree of imported raw materials, then the positive effect of a weak rupiah is disabled. The situation is similarly complicated for those companies that import a high degree of raw materials to make products that are sold on the domestic market. They could of course simply raise retail prices, but the consequence is that demand for the products could drop.
Read MoreThe rupiah weakened back to Rp14,418 against the U.S. dollar on Tuesday (July 3), while the central bank (Bank Indonesia/BI) claimed the current rupiah depreciation follows the regional currencies. BI said the rupiah movement is still manageable as part of global phenomena.
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