Rupiah edges lower as oil prices stay high

Jakarta (ANTARA) — The rupiah’s exchange rate on Thursday morning edged lower by 1 point or 0.01 percent to Rp17,655 per US dollar, compared with the previous close at Rp17,654 per US dollar.

Woori Saudara Bank analyst Rully Nova said the rupiah’s weakness was influenced by oil prices that remained high.

“The rupiah in today’s trading is expected to weaken, with a range of Rp17,690 to Rp17,740, influenced by global factors: oil prices that remain above $100 per barrel and a still-strong dollar index,” he told ANTARA in Jakarta on Thursday.

Quoting Anadolu, Brent crude futures were trading at $104.5 per barrel, down about 6.5 percent. West Texas Intermediate (WTI) price fell 5.5 percent to $98 per barrel.

The downside sentiment was triggered by US President Donald Trump’s statement that the war with Iran would end soon, and US oil inventories fell the most on record last week.

Trump said negotiations with Iran are ongoing and it will soon be clear whether both sides can reach an agreement.

Price declines also occurred in tandem with declines in US crude inventories, including strategic reserves, the most significant in history last week due to surging exports and starting to reduce domestic stocks.

Crude stocks fell by 17.8 million barrels, pushing total inventories to the lowest level in nearly a year.

Looking at domestic sentiment, the government’s fiscal condition is perceived as fragile amid geopolitics, oil prices, subsidies, and incentives to maintain consumer buying data.

“Presidential speech (Prabowo Subianto) still needs to be assessed more deeply given the fragile fiscal condition at present, considering Indonesia’s tax ratio has never risen above 10 percent of GDP,” Nova said.