Rupiah weakens on declining forex reserves

Rupiah weakens on declining forex reserves

Jakarta (ANTARA) -
The rupiah fell against the US dollar on the Jakarta interbank market on Friday evening, as foreign exchange reserves declined at Bank Indonesia.  

The local unit weakened 45 points, or 0.32 percent, to close at Rp14,325 per US dollar, compared to the previous close of Rp14,280 per US dollar.

PT Garuda Berjangka President Director Ibrahim Assuaibi said the drastic decline in foreign exchange reserves to US$120.3 billion in May, from US$124.3 billion one month earlier, was a negative catalyst for the rupiah.

"It seems that the US$4 billion drop in the foreign exchange reserves has worried investors," he said.

Although foreign exchange reserves are still adequate, Bank Indonesia's tools to stabilize the rupiah's exchange rate against foreign currencies becomes more limited, he said.

"Investors are worrying about the future of the rupiah, which has put selling pressure on this currency," he said.

Demand for US dollars also increased at the end of the second quarter, as foreign corporations operating in Indonesia began to pay dividends to their head offices abroad.

"The increase in corporations' demands for US dollars has weakened the rupiah," he said.

The rupiah traded at Rp14,279 per US dollar on Friday morning. Throughout the day, the rupiah moved within the range of Rp14,279 to Rp14,325 per US dollar.

According to the Bank Indonesia mid rate on Friday, the rupiah depreciated to Rp14,304 per US dollar, compared to the earlier Rp14,270 per US dollar.