US Dollar Dropped, Rupiah & Asian Currency ‘Debauchery’

Jakarta, Reportase –The Garuda currency closed against the United States (US) dollar in trading Tuesday (21/3/2023). According to data Refinitivthe rupiah closed at Rp. 15,340/US$, strengthening 0.1%.

This strengthening broke yesterday’s bad record in which the Garuda currency weakened 0.1%. Financial markets are closed for 2 days from 22-23 March in the framework of the Holy Day of Silence for the Saka New Year 1945.

Bank Indonesia (BI) revealed that the rupiah managed to strengthen in trading last Tuesday supported by recovering demand from the domestic market.

In Reportase’s notes, Edi Susanto, Head of the Economic and Monetary Policy Department at BI, said that the movement of the rupiah was still in a controlled corridor. In fact, the strengthening of the rupiah is better than the Thai baht and Indian rupee.

“Until this moment, the rupiah is still experiencing a slight strengthening, indeed the strengthening is smaller than PHP (peso) and MYR (ringgit), but better than the Indian Rupee and THB (baht), where both are currently experiencing weakness,” Edi said. Reportase, Tuesday (21/3/2023).

It means, In the midst of uncertainty over global sentiment and genuine demand in the domestic market, the rupiah is still moving in a controlled corridor.

Based on Refinitiv data, the rupiah appreciated 0.55% to IDR 15,360/US$. Not only the rupiah, all major Asian currencies were able to strengthen against the US dollar. The rupiah is the third best, under the South Korean won and the Malaysian Ringgit.

The following is the movement of the US dollar against major Asian currencies until 14:50 WIB.

The US dollar index on Wednesday (23/3/2023) was observed to have fallen more than 0.19% to 102.35, after the Fed raised interest rates. The weakening index that measures the strength of the US dollar continued to be corrected 0.22% this afternoon.

The Fed continues to raise its benchmark interest rate by 25 basis points (bps) to 4.75-5.0%, Wednesday US time or early Thursday Indonesian time. Even though they continued to raise interest rates, this increase was in accordance with market predictions based on the CME FedWatch tool.

Worse, the increase in the Fed’s interest rate occurred in the midst of the US banking crisis that rocked the world. The Fed’s decision emphasized that inflation remains the main consideration for the Fed.

Jerome Powell said that the Federal Open Market Committee (FOMC) meeting considered holding interest rate increases due to the banking crisis.

However, the meeting still decided on an increase because inflation was still strong and the labor market was still hot.

It seems that reducing inflation for the Fed is so important especially its goal to reach the target of 2%. US inflation has actually fallen to 6% (year-on-year/yoy) in February 2023, from 6.4% (yoy) in January 2023. However, it is still far above the Fed’s target of around 2%.

CNBC INDONESIA RESEARCH

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