Rupiah Strengthens amid Bad Issues. Will It Weaken Again?


The Rupiah exchange rate strengthens sharply today, Wednesday (26/1). As of today, the Rupiah exchange rate strengthens at Rp. 14,332 per US dollar. That way, it means that the Rupiah has strengthened by 17.5 points or 0.12 percent from the previous value which was at Rp. 14,350 per US Dollar.

This is of course surprising because the value of the Rupiah in the past two days has continued to weaken. The weakening of the value of the Republic of Indonesia’s money was caused by negative sentiments that came from many directions. It is estimated that the increase in the value of the Rupiah is due to the intervention of Bank Indonesia (BI).

Bank Indonesia had a hand in strengthening the Rupiah because they did many interventions. Foreign exchange reserves in December were recorded at US$ 144.9 billion, which can be used for triple intervention, namely intervention in the Domestic Non-Delivery Forward (DNDF) market, in the spot market, to the Government Securities (SBN) market.

Will It Weaken Again?

However, according to Money Market Analyst, Ariston Tjendra, the Rupiah will be under pressure again today due to negative sentiment in other countries. He explained that recently the political tensions between Russia and Ukraine were heating up. This is what causes market tensions and has an impact on the Rupiah.

He said, “This Russia and Ukraine issue will expand because it involves Ukraine’s allies, namely NATO member countries. Geopolitical tensions are heating up because NATO is starting to prepare for the worst possible situation against Russia.”

Another factor that can hamper the growth of the Rupiah is because the international market is still waiting for the results of the decision of the United States central bank, The Federal Reserve (The Fed). The results will be announced today.

The results of the decision will greatly affect the strengthening of the currency. International markets are waiting to see if the Fed will give an indication of a more aggressive monetary tightening policy than the previous market forecast.

Previously, the market predicted that the US benchmark interest rate would rise in March. The increase is predicted to occur 3 times with the aim of suppressing the increasingly worrying inflation.

Domestic Sentiment

Meanwhile, domestic sentiment also affects currency values. The main cause is the case of transmission of the new variant of Omicron which is on the rise in Indonesia. The increasing cases of virus transmission have caused the government to impose Community Activity Restrictions (PPKM).

If the level of PPKM in various cities increases, the mobility of the community will decrease. This is what causes the economic downturn. The bad impact is that it causes the weakening of the price of the Rupiah against the US dollar.

Against the backdrop of negative sentiment in various parts of the world and within the country, Ariston predicts the Rupiah will weaken again at Rp. 14,370 to Rp. 14,380. Meanwhile, Support in the range of Rp. 14,320 to Rp. 14,330.

But everything can still happen, as of today, the Rupiah is still strengthening. It could be strong again tomorrow or even weakened again. Everything depends on the conditions and sentiments abroad and domestically.