The rupiah traded at Rp18,079 per US dollar at midday on Friday, weakening from Rp18,045 at the previous session’s close, as the US dollar strengthened broadly against emerging-market currencies.
Dollar index climbs
Firman Mochtar, Head of Monetary Economic Policy Department at Bank Indonesia, told reporters at a briefing at the BI building in Jakarta that the DXY dollar index against developed-country currencies had strengthened. “The impact is that the DXY, the dollar index against developed-country currencies, has strengthened; yesterday it was recorded at 101. If it strengthens, emerging-market currencies will naturally weaken, including Indonesia’s,” he said.
US Treasury yields have risen above 5 percent for a prolonged period, Mochtar said, a trend that has reduced investor appetite for emerging markets including Indonesia. “So capital outflows, global pressure and domestic pressure, which generally put pressure on the rupiah exchange rate. That is what happened,” he said.
MSCI reclassification cited
Mochtar also pointed to an MSCI announcement discussing a possible reclassification of the Indonesian stock market as a standalone market, which he said was adding further pressure on the rupiah.
Bank Indonesia described the rupiah’s move as the product of both global and domestic forces acting together.
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Source: Bank Indonesia
