Rupiah weakens following rise in US CPI

The rupiah exchange rate against the US dollar weakened by 58 points, or 0.33 per cent, at the close of Monday’s trading, reaching Rp17,669 per US dollar compared to the previous close of Rp17,611 per US dollar.

Currency analyst and Director of Laba Forexindo Berjangka, Ibrahim Assuabi, stated that the rupiah’s weakness was influenced by the rise in the US Consumer Price Index (CPI).

“August inflation data showed a monthly increase of 0.3 per cent in the core consumer price index (excluding food and energy costs),” he told ANTARA in Jakarta on Monday.

Citing Xinhua, the US annual Consumer Price Index (CPI) reached 3.4 per cent. Core CPI, which excludes volatile food and energy components, was recorded at 2.4 per cent.

The market is currently pricing in approximately an 88 per cent probability of an interest rate hike in September.

“An interest rate hike could also trigger political tension for the Fed. President Donald Trump once again called for a reduction in interest rates on Sunday (13/9), continuing his latest criticism of the central bank’s policy stance,” he said.

Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened today to the level of Rp17,635 per US dollar from the previous level of Rp17,611 per US dollar.