JAKARTA. Rupiah collapsed, hit the level of Rp 13,500 per US dollar. In the spot market, Thursday (24/11), the rupiah weakened by 0.5% to the level of Rp 13,558 per US dollar. Meanwhile, the BI (the Central Bank) middle exchange rate eroded to the level of USD 13,540.

The weakening rupiah was likely to be driven by the global pressure, mainlyfrom the US (the United States of America). The summary of FOMC meeting in November 2016 indicates the increase in The Fed’s interest rate in December 2016. This has led the stronger US dollar against all currencies, including rupiah.

Even so, the Senior Deputy Governor of BI Mirza Adityaswara is optimistic that this condition is only temporary. After Donald Trump was elected as US’ President, the financial market has been volatile. "However, this is temporary, until the Trump’s cabinet announced their policy direction in January 2017,” Mirza said in Surabaya on Thursday (24/11).

Aside of rupiah, the exchange rates of other Asia’s currencies also weakened against the US dollar (US). The Bloomberg-JPMorgan Asia Dollar Index shows the numbers of 103.29, being the weakest since March 2009.

A stronger US dollar will lead to a large capital outflow from the development countries. The financial markets worry that Trump will realize the policies as promised during the campaign period.

Trump will push the US economy to move faster. This requires additional funds, such as from debts. Subsequently, the inflation rate will be triggered, while the benchmark interest rate will be driven up. This will make the greenback rebounds against world currencies.

Hence, Mirza was reluctant to speculate about the level of rupiah exchange rate in 2017. BI prefers to adopt wait and see stance over Trump’s actual policies before predicting their impacts in the future. “The outlook of rupiah in 2017 maybe change, but still has to monitor the US policy," said Mirza.

To anticipate the weakening rupiah, BI claimed to have intervened the three markets simultaneously, namely the foreign exchange, government bonds (SBN), and the swap markets.

In several occasions, BI has mentioned that the rupiah exchange rate in 2017 will be ranging at the level of Rp 13,200-Rp 13,500 per US dollar, while the 2017 State Budget set the exchange rate of Rp 13,300 per US dollar. “The exchange rate is highly depended on the global economic development, US policy and domestic economic conditions," said Director General of Treasury at the Ministry of Finance Askolani.

Rupiah will be more pressured if the Trump’s policies lead to a stronger US dollar. Rupiah will be more deteriorated in the first quarter of 2017 if the political tension ahead of and after the concurrent local elections on February 2017 heats up.

Economist at Samuel Asset Manajemen Lana Soelistianingsih said that the global uncertainty will still be pressing the rupiah in the first quarter of 2017. "The rupiah will just be stable in the second quarter of 2017," Lana said.

(Muhammad Farid/Translator)

Editor: Barratut Taqiyyah Rafie