Rupiah Weakens Today, Indef: Market Awaits BI RDG Outcome
The rupiah exchange rate weakened by 94 points, or 0.53%, to Rp17,856 per US dollar on Thursday morning (18/6) compared to the close on Wednesday (17/6) at Rp17,762 per US dollar. Responding to this, the Head of Macroeconomics and Finance at the Institute for Development of Economics and Finance (Indef), Rizal Taufikurrahman, assessed that today’s rupiah depreciation was influenced more by market players’ wait-and-see attitude ahead of the results of Bank Indonesia’s (BI) Board of Governors Meeting (RDG) than by significantly changed fundamental factors.
“Investors tend to hold positions while waiting for BI’s policy direction, especially regarding interest rates and exchange rate stabilisation strategies. Additionally, global sentiment such as the strengthening of the US dollar, movements in US Treasury yields, and geopolitical uncertainty remain dominant factors limiting the rupiah’s appreciation,” said Rizal when contacted.
Rizal is of the view that after the BI RDG, the rupiah’s direction will depend heavily on the credibility of the central bank’s policy and communication. He believes that if BI can provide a strong signal regarding its commitment to maintaining rupiah stability through a mix of monetary policy and foreign exchange market intervention, the rupiah has the opportunity to strengthen again or at least move more stably. However, he cautioned that if the market deems BI’s response inadequate amid global pressures, the rupiah still has the potential to experience further pressure.
“I estimate that room for rupiah appreciation remains open, but it tends to be limited and volatile. As long as global uncertainty remains high and the interest rate differential with developed countries has not changed much, the rupiah’s movement is likely to remain within a fluctuating range,” he stated.
Therefore, Rizal emphasised that maintaining monetary policy credibility, strengthening export foreign exchange inflows, and increasing investor confidence in domestic economic fundamentals are key to making rupiah appreciation more sustainable, rather than merely driven by short-term sentiment.