Rupiah Closes Weak at 18,049 per US Dollar

The rupiah exchange rate against the US dollar closed 0.46% weaker at Rp18,049 in Thursday’s (4/6) trading session. The rupiah corrected by 83 points from its previous position of Rp17,966 per US dollar, pressured by global geopolitical sentiment and domestic fiscal worries. Money market analyst Ibrahim Assuaibi explained that the depreciation was triggered by a combination of external factors, particularly rising tensions in the Middle East. Although Washington announced a ceasefire deal between Israel and Lebanon, the situation remained heated following reports of Iranian missile attacks on Kuwait and Bahrain, as well as a US strike on Qeshm Island in Iran. Investors are inclined to be cautious amid this uncertainty. On the other hand, the market is also awaiting the release of US non-farm payrolls data scheduled for Friday tomorrow, Ibrahim said in Jakarta. On the domestic front, the surge in crude oil prices is a primary concern because of its potential to pressure the external balance and push Indonesia’s fiscal deficit closer to the 3% limit. April trade data showed a shrinking surplus due to increased oil imports, while May inflation was recorded rising to 3.08%, exceeding the midpoint of Bank Indonesia’s target. Additional negative sentiment came from the investment sector. Moody’s Ratings assigned a Baa2 rating to the global medium-term note programme of PT Danantara Investment Management, but with a negative outlook. This assessment reflects the strong linkage between the company and the Government of Indonesia as its sole shareholder. In the long term, the rating is likely to move in line with Indonesia’s debt rating. Danantara’s rating could fall if Indonesia’s debt rating weakens, Ibrahim added. For upcoming trading, the exchange rate is still predicted to move in a fluctuating manner. Ibrahim projected the rupiah could potentially close weaker in the range of Rp18,050 to Rp18,120 per US dollar.