Jakarta, Indonesia Sentinel — The Indonesian rupiah continued its decline against the US dollar, driven by Bank Indonesia’s (BI) monetary policy announcement, anticipation surrounding the release of Indonesia’s current account and Balance of Payments (BoP) data, and broader global economic shifts. The dollar gained strength following Donald Trump’s victory in the US presidential election, prompting a flight of foreign capital back to the US.
“Political changes in the US have broadly strengthened the US dollar and shifted global investors’ preferences to repatriate portfolios to the US,” said Bank Indonesia Governor Perry Warjiyo during a press conference on Thursday, November 21, 2024.
Rupiah Under Pressure
According to Refinitiv, the rupiah opened weaker on Thursday, depreciating by 0.13% to IDR 15,880 per USD. The currency continued its slide within minutes of trading, dropping 0.5% to IDR 15,940 per USD.
Meanwhile, the US Dollar Index (DXY) showed a slight decline of 0.11% at 106.56 as of 08:59 WIB, compared to 106.68 the previous day.
Bank Indonesia’s Response
On Wednesday, BI announced its decision to maintain the benchmark interest rate at 6% to ensure inflation remains within the government’s target of 2.5% ±1% for 2024 and 2025.
Governor Perry Warjiyo emphasized the central bank’s commitment to stabilizing the rupiah amid rising geopolitical and global economic uncertainties, particularly developments in US politics.
“BI will continue to monitor the rupiah exchange rate, inflation prospects, and evolving data to assess the feasibility of further interest rate adjustments,” he stated.
Global Tensions and Dollar Strength
The geopolitical landscape also contributed to the dollar’s strength. Tensions escalated as Ukraine targeted Bryansk, Russia, using US-supplied Army Tactical Missile Systems (ATACMS). This development fueled a rise in the dollar during previous trading sessions.
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Market Anticipation
Investors are now closely watching the release of Indonesia’s current account and BoP data by Bank Indonesia. These reports are expected to play a critical role in determining whether foreign capital flows back into Indonesia’s financial markets.
The outcome of these economic indicators will influence market sentiment and the stability of the rupiah in the coming weeks, as global uncertainties and domestic policy measures continue to weigh heavily on Indonesia’s economy.
(Becky)
