Rupiah Predicted to Weaken Ahead of Fed Minutes Release

The rupiah exchange rate on Tuesday morning moved flat, unchanged at Rp17,995 per US dollar compared to the previous close of Rp17,995 per US dollar. Analyst Rully Nova from Bank Woori Saudara estimates the rupiah will weaken as market players await the release of the Federal Reserve’s meeting minutes. “The rupiah in today’s trading is expected to remain under pressure, weakening in the range of Rp17,950 to Rp18,020, influenced by global factors. Although the dollar index has weakened, market players remain cautious in anticipating the release of the Fed meeting minutes on Thursday, 9 July, US time,” he said in Jakarta on Tuesday. Rully added that at the previous Fed meeting, the US central bank remained focused on its 2 percent inflation target. However, poor nonfarm payrolls data could potentially shift the focus of the Fed under Governor Kevin Warsh, making it more flexible regarding forward guidance that provides clearer signals on the direction of interest rates. Looking at domestic factors, market players are considering sentiment from the trade balance, which recorded a deficit of 1.61 billion US dollars, and capital outflows from the stock market amounting to Rp2.73 trillion since the beginning of July. Furthermore, market players are also in a wait-and-see mode ahead of the release of foreign exchange reserves data by Bank Indonesia later today. “Foreign exchange reserves are expected to decline again due to BI’s intervention in the foreign exchange market, but the ratio remains adequate, above five months of imports and government debt payments,” Rully stated.