JAKARTA. Along the year of 2016, rupiah has strengthened by 2.285 and has been the second best currency in Asia after Japan’s yen.

Analysts believe that rupiah will move in positive zone in this year amid lot of pressures. Goldmans Sachs Group Inc mentioned that rupiah has its power to control exchange rate volatility and the foreign investors’ capital outflow, which are driven by the increase in interest rate in the US (United States of America).

As is quoted by Bloomberg, Head of Economist at Asia Pacific Goldman Sachs Andrew Tilton said that rupiah has been in better position than 2013, when market’s panic took place after The Fed stopped the stimulus.

Rupiah may not likely deppreciate in the current position, as domestic bonds still provide high yields, which can control the investment losses.

Financial market analyst at Bank Mandiri Reny Eka Putri said, rupiah exchange rate will likely be corrected to the levels of Rp 13,500-Rp 13,600 per US dollar.

The formation of the new cabinet of the US under the leadership of Donald Trump may have potential risks to rupiah exchange rate. Trump’s policies are expected to bring positive impacts to the US’ economy. “If Trump’s policies strengthen the US’ economy, The Fed’s rate rise will be realized,” Reny said.

But rupiah may be strengthening in the second semester. BI is predicted to control the 7-days reserve repot rate at the level of 4.75%, while economy may grow at 5.1% and the export will increase. “This will drive rupiah to return to the level of Rp 13,400 per US dollar,” Reny said. The commodities prices rise will also support the strenghening rupiah.

Chief Economist at SKHA Institute for Global Competitiveness (SIGC) Eric Sugandi said, the rupiah exchange rate will be supported by the economic growth and inflation rate, which is controlled at the level of 3.5%. Meanwhile, the budget deficit will be stable at the level of 2.5%. These conditions may attract the investors. “The largest challenge will be The Fed’s plan to raise interest rate in three times by total prediction of 75bps,” Eric said.

Furthermore, Europe and China would still be overshadowed with negative catalysts, due to the economic slowdown. Europe may also experience political turbulence as the effect of the elections in France, Germany, Italy, and Netherlands.

Eric predicts that rupiah exchange rate had depreciated to Rp 13,600 per US dollar in semester I-2016. However, rupiah might have been appreciated to Rp 13,300 per US dollar. (Muhammad Farid/Translator)

Editor: Barratut Taqiyyah Rafie