At the start of trading Thursday (29/12), the rupiah exchange rate fell against the US Dollar. The rupiah opened trading with a weakening of 0.26%. This figure is the weakest in 2022.
Based on Refinitiv data, the rupiah depreciation increased to 0.38% to IDR 15,760/US$ at 9:09 WIB which was the weakest record this year, as well as since April 2020.
The previous weakest record was recorded on November 30, when the rupiah touched IDR 15,748/US$.
The sluggish domestic trade made it difficult for the rupiah to appreciate. Low transactions on the Indonesian Stock Exchange (IDX) are an indication.
At the beginning of the week, the transaction value on the stock market was only Rp 6.4 trillion. This is the lowest transaction in all of December. Then on Tuesday, the transaction value was recorded at IDR 8.5 trillion, and yesterday it was IDR 8.9 trillion. Although it increased, it was still far below this year’s average of around IDR 14 trillion.
The same thing is likely to occur in the currency market, understand that towards the end of the year, more market players are on vacation. When transaction values are low, volatility will increase and the rupiah tends to weaken, especially considering that the need for US dollars at the end of the year usually increases.
Apart from that, the unfavorable sentiment of market players ahead of the 2023 world recession also put pressure on the rupiah. When a recession occurs, the US dollar, which has haven status, will be the prima donna.
The cautious investor mood appears to pervade the entire investment asset class ahead of the close of 2022. Quoting Bloomberg, Thursday (29/12/2022), global stock markets have lost a fifth of their value, the biggest drop since 2008 on an annual basis, and global bond indexes slumped 16 percent.
The dollar has surged 7 percent and the US 10-year yield has jumped to above 3.80 percent from just 1.5 percent at the end of 2021 as the Federal Reserve pursues an aggressive rate-raising path to rein in inflation.