Rupiah strengthens amid concern over trade war developments

Rupiah strengthens amid concern over trade war developments

A money changer officer checks rupiah and US dollar banknotes in Jakarta on July 2, 2019. (ANTARA FOTO/PUSPA PERWITASARI/Su)

Jakarta (ANTARA) - The rupiah strengthened against the US dollar at the Jakarta interbank market on Wednesday morning amid concerns over developments in negotiations on the US-China trade war.

The Indonesian currency rose slightly by one point to Rp14,027 per US dollar on Wednesday morning as compared to Rp14,028 per US dollar earlier.

"Investors are concerned over the possibility of the US-China trade talks reaching a standstill following a statement by President Trump that China failed to keep up a promise to buy US farm products. The countries are supposed to reach an agreement this week," Samuel Asset Management economist Lana Soelistianingsih remarked in Jakarta on Wednesday.

In the meantime, US economic data in June 2019 had improved. Investors were highly concerned over the possibility of the Fed lowering interest rates at the meeting of the Federal Open Market Committee (FOMC) on July 30-31, 2019.

On the domestic side, rising investment in the second quarter of 2019 served as a positive catalyst for the rupiah.

The Investment Coordinating Board (BKPM) announced on Tuesday the realized investment in the second quarter of 2019 rose to Rp200.5 trillion, from Rp176.3 trillion in the same quarter last year.

Similarly, the realized investment in the first half of 2019 increased to Rp395.6 trillion as compared to Rp361.6 trillion in the corresponding period last year.

"In the midst of (concern over) the trade war and domestic political situation, the rising investment shores up optimism of investment being an engine of Indonesian economic growth after household consumption," she stated.

She forecast the rupiah to strengthen in the range of Rp14,000-Rp14,020 per US dollar on Wednesday.

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