US-China new import duty weakens rupiah to RP14,933

US-China new import duty weakens rupiah to RP14,933

US President Donald Trump (right) and Chinese President Xi Jinping. (ANTARA News/ Reuters)

Jakarta (ANTARA News) - Indonesia`s central bank (BI) said that the weakening of the rupiah against the US dollar on Tuesday was a result of the US announcement that it would impose a 10 percent import duty on goods from China.

US President Donald Trump announced that he would impose this import duty beginning from September 24, 2018.

New turns in the trade war between the two world economic giants sparked a depreciation in the value of currencies in developing countries, including Indonesia. China has also repeatedly emphasized that it will reciprocate all acts of imposition of import duties by the US.

"The sentiment (trade war) has the most role, the risk of the US-China trade war has affected the currencies of developing countries," BI Deputy Governor Dody Budi Waluyo said in Jakarta on Tuesday.

The value of import duties that Trump will charge is worth US$200 billion, or nearly Rp3,000 trillion. In early 2018, there was a possibility that the US would again raise the import duty to 25 percent.

The external impact of the trade war of these two superpowers is the most difficult thing calculated by developing countries` central banks to form anticipatory policies to maintain economic stability.

Waluyo promised the central bank would remain in the market to intervene in a measured exchange rate.

"Hopefully, the pressure is not too much. That is one of the external risks that we see and that also affects the currency in emerging markets," he said.

The pressure from the trade war is also one of the external pressure indicators that will hit the rupiah for the remainder of this year, in addition to the US Federal Reserve`s benchmark interest rate hike.

BI will hold a Board of Governors` Meeting (RDG) from September 26-27, 2018, to determine the stabilization policy.

"We will check in the next week`s RDG. We will see all risks from the external and domestic point of view. There is virtually nothing new from the process we did in the previous months," he said.

Until Tuesday (Sept 18) 12 a.m local time, the rupiah was at Rp14,933 per US dollar or down 0.35 percent (53 points) compared to the previous day`s closing. The currency previously opened down 18 points or 0.12 percent at Rp14,898 per US dollar.

As of Tuesday, Bank Indonesia pegged the middle rate at Rp14,908 per US dollar, down 49 points or 0.32 percent from the position of Rp14,859 on Monday (September 17).

Reporting Indra Arief Pribadi
(T.SYS/A/KR-BSR/C/A014) 18-09-2018 23:41:08