Rupiah Exchange Rate Indonesia to Remain Under Pressure

As we are in the middle of the fourth quarter of 2017, we detect rising pressures on the Indonesian rupiah exchange rate amid broad US dollar strength. However, the decision of Indonesias central bank to leave its interest rate regime unchanged at the November meeting managed to give some support to the rupiah (as well as Indonesias improving balance of payments, current account deficit, and capital and financial account).

But despite positive domestic factors, there are plenty of external factors that put pressure on emerging market currencies. Problematically, these external issues are much more influential than domestic factors.

While the rupiah remained stable against the US dollar in the first nine months of 2017, there occurred significant rupiah weakening (in line with the overall performance of emerging market currencies) from mid-September 2017. However, the rupiah has been among the most-affected Asian emerging market currencies since mid-September (together with the Philippine peso and Hong Kong dollar). This is related to the (net) capital outflow that has occurred so far this year.

Issues that have caused a strong US dollar over the past months are growing expectations of another Fed Funds Rate hike before the end of the year, US President Donald Trumps plans for tax reform, the unwinding of the Feds USD $4.5 trillion balance sheet, and Trumps nomination of Jerome Powell to serve as the next Fed chairman. Meanwhile, there still exists concern that geopolitical turmoil can flare up anytime in North Korea and Spain.

Therefore, the rupiah is expected to remain under pressure in the remainder of 2017 although positive domestic factors will limit the degree of weakening. Moreover, another Fed Funds Rate hike (possibly in December) is assumed to be priced in already and therefore will have limited impact on the rupiah. US tax reform is more likely to have a big negative impact on the rupiah. However, it remains to be seen whether tax reforms can be realized in the USA.

In 2018 the rupiah is likely to remain under pressure too as the Fed is expected to implement two more rate hikes. A positive matter, however, is that Jerome Powell seems not too hawkish. However, it remains to be seen whether Powell can communicate Fed policies clearly to markets in order to prevent shocks.


Source : Indonesia Investments

Nov 18, 2017

Bank note current rate:
  currency buy sell
GBP 18,850 19,150
AUD 10,525 10,740
HKD 1,691 1,752
USD 13,500 13,700
MYR 3,425 3,510
CAD 10,550 10,825
SGD 10,150 10,400
EURO 16,650 16,850
SFR 14,400 14,650
YEN 126 128.30
NZD 9,800 10,000
THB 421 443
NT 446 476
WON 11.77 12.75
DKK 2,130 2,265
SEK 1,595 1,685
BND 10,100 10,400
NOK 1,658 1,740
SAR 3,488 3,655
PHP 245 265
RMB 2,066 2,163
INR 163 211
RUB 182 242
AED 3,587 3,730
   Last Updated :24 Feb 2018 - 09:35 AM
These are indicative rates. For actual exchange rates, please visit or call our outlets to (0361) 4741 940. We reserve the right to change the rates at any time without prior notice.
Currency Converter

Please Note :
Central Kuta does not sell foreign currencies in small denominations. Please Contact us for further information.