Rupiah strengthens as BIs interest rate declined

The Indonesian rupiah exchange rate traded on the Jakarta interbank market Friday has strengthened with a decline in the Indonesian central bank, Bank Indonesia (BI), benchmark interest rate. At 9.48 a.m. local time, rupiah strengthened 57 points or 0.41 percent to RP13,903 per US dollar, compared to the previous one which was Rp13,960 per US dollar.

An economist from Samuel Asset Management Lana Soelistianingsih stated in Jakarta Friday that BIs decision to decline benchmark interest rate by 25 basis points to 5.75 percent became a positive catalyst for the exchange rate.

She explained that with this decision, the current account deficit or CAD for Q2-2019 was still relatively safe, considering the balance of trade during Q2-2019 was recorded at US$1.8 billion, enlarged compared to the trade balance deficit in Q2-2018 which potentially widen CAD Q2-2019, compared to CAD Q2-2018 which was recorded 3.02 percent of gross domestic product or GDP.

The trend of BIs benchmark interest rate in the future is likely to decline, Lana added.

Perhaps there will still be a 25 bps decline to 5.5 percent, until the end of 2019, she said.

Today the rupiah would weaken in the range of Rp13,965 per US dollar to Rp14,000 per US dollar, Lana predicted.

Meanwhile, BIs middle rate Friday showed that the rupiah strengthened to Rp13,913 per US dollar compared to the previous day which was Rp13,976 per US dollar.

 

 

Source : antaranews.com

July 20th, 2019

 
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