Economists Warn Rupiah Could Hit Rp18,200, Watch Out for These 3 Factors

Several economic observers have expressed that the rupiah could weaken further if global pressures remain substantial. In fact, there is a significant potential for the rupiah to breach the psychological level of Rp18,200/US$.

Josua Pardede, Chief Economist at Bank Permata, stated that the rupiah has a high probability of hitting the Rp18,200 per US dollar level if global pressure remains strong.

“The rupiah could still move towards Rp18,200/US$, although this is treated as a pressure scenario. Since the move from Rp18,000 to Rp18,200 is only about a 1% depreciation, that level could be touched if global pressures continue to haunt us,” Josua told CNBC Indonesia.

According to him, there are three factors that could further weaken the rupiah. First, global oil prices remaining at the US$100 per barrel level; second, 10-year US Treasury yields remaining above 5%; and third, the presence of foreign investor outflows.

“There are three conditions that, if they occur simultaneously, could deepen the rupiah’s depreciation: oil prices staying above US$100 per barrel, 10-year US bond yields remaining above 5%, and negative capital flows occurring at the same time,” Josua explained.

Meanwhile, M. Rizal Taufikurahman, Head of the Centre of Macroeconomics and Finance at the Institute for Development of Economics and Finance (INDEF), said the possibility of the rupiah touching the Rp18,200 per US dollar level is wide open.

“The potential for the rupiah to breach Rp18,200 per US dollar is open in the coming weeks,” said Rizal.

He noted that the gap between Rp18,000 and Rp18,200 is very slim, at only 1.1%, making this a risk scenario that needs to be anticipated.

“The potential for the rupiah to breach that level is wide open if dollar strengthening, capital outflows, and foreign exchange demand continue,” Rizal added.

According to Refinitiv data, the rupiah ended trading at Rp17,960/US, aslightappreciationof0.03.