Rupiah Strengthens to Rp17,694 per US Dollar After BI Holds Interest Rate

The rupiah exchange rate against the US dollar showed positive performance at the close of trading on Friday (21/8). The rupiah strengthened by 54 points or 0.30 percent, ending at Rp17,694 per US dollar compared with the previous close of Rp17,748 per US dollar.

This strengthening was in line with the movement of Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR), which also appreciated to Rp17,705 per US dollar, up from the previous position of Rp17,779 per US dollar.

Muhammad Amru Syifa of Indonesia Commodity & Derivatives Exchange (ICDX) Research and Development explained that the rupiah’s strengthening was driven by positive domestic sentiment, particularly Bank Indonesia’s decision to maintain the BI-Rate at 5.75 percent.

“The policy remains directed at maintaining rupiah and inflation stability, while providing support for economic growth,” Amru said in Jakarta on Friday.

Despite the strengthening, the rupiah’s movement remains overshadowed by global market dynamics, particularly the direction of the US dollar index and Treasury yields. The US dollar came under pressure after the US government announced plans to increase buybacks of long-term bonds.

However, the pressure on the greenback did not last long. Treasury yields climbed again amid investor concerns about inflation and fiscal conditions in the United States.

In addition, the market is currently watching the minutes of the Federal Open Market Committee (FOMC). Amru noted that there are differences of opinion among Fed officials regarding the future direction of the benchmark interest rate. Uncertainty over the outlook for US monetary policy is keeping market participants wary of exchange rate volatility in the coming period.