The rupiah strengthened against the US dollar as uncertainty about the money market eased following the Federal Reserves decision to raise its rate, Chief Researcher of NH Korindo Securities Indonesia, Reza Priyambada, said here on Monday.
"The euphoria due to the US central banks decision has revived investors demand for assets of risky countries. The fact that Indonesia has regained its investment grade rating is one of the factors prompting investors to reinvest in the country and, accordingly, the rupiah is strengthening," he said.
Investors are also optimistic about Indonesias economic outlook in 2016 as a result of aggressive capital expenditure and monetary stimuli aimed at pushing economic growth, he said.
Economist Leo Rinaldy of Mandiri Sekuritas, meanwhile, said the Federal Reserves plan to raise its rate gradually in 2016 has received positive responses from money market investors.
He said the investors also believed that Indonesias macroeconomic fundamentals will be better next year.
However, the domestic economic performance, which is far from expectation, and the Fed rate which may increase at a faster pace to more than 1.25 percent in 2016, may send out signals of a negative sentiment about the rupiahs exchange rate, he said.
"The Fed rate hike will entail a risk if it does not meet market expectation," he said.(*)
Editor: Heru Purwanto
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