Rupiah pressured by rise in US PPI data
The rupiah exchange rate against the US dollar weakened by 64 points or 0.36 per cent to Rp17,611 per US dollar at the close of trading on Friday, compared to the previous close of Rp17,547 per US dollar.
Muhammad Amru Syifa from the Research and Development department of the Indonesia Commodity & Derivatives Exchange (ICDX) stated that the rupiah’s movement was pressured by the rise in US Producer Price Index (PPI) data.
“The rupiah continued to trade under pressure on Friday as the market responded to US PPI data (which increased to 5.4 per cent year-on-year (yoy) from 4.8 per cent yoy in the previous month, exceeding the consensus of 5.3 per cent yoy) released on Thursday (10/9),” he told ANTARA in Jakarta on Friday.
The increase in the annual PPI to 5.4 per cent has reportedly drawn investor attention back to inflation risks and the prospects of Federal Reserve (The Fed) policy, which has contributed to rising US bond yields and sustained demand for the US dollar.
External pressure was also reinforced by high oil prices amidst ongoing geopolitical tensions.
Meanwhile, regarding domestic sentiment, retail sales data released on Thursday (10/9) showed an improvement in consumption activity, serving as one of the factors that helped limit the rupiah’s depreciation.
“For the next trading session, market focus will shift to the US CPI (Consumer Price Index) released on Friday night (11/9). These inflation results will determine whether the strengthening of the dollar and the rise in US yields continue ahead of the Fed’s decision next week,” said Amru.
He added that if the CPI is higher than expected, the rupiah could face further pressure, whereas a lower result could provide room for recovery. Under these conditions, the rupiah is expected to move quite volatile within the range of Rp17,500 - Rp17,650 per US dollar.
Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened today to the level of Rp17,611 per US dollar from the previous level of Rp17,536 per US dollar.