Rupiah gains over Fed's interest rate cut speculation

Rupiah gains over Fed's interest rate cut speculation

The rupiah and US dollar banknotes ANTARA FOTO/Puspa Perwitasari.

Jakarta (ANTARA) - The rupiah strengthened to Rp14,137 against the greenback in the Jakarta interbank market on Friday over speculative market behavior in connection with the US Federal Reserve cutting its interest rate.

"The report of weak US economic data has sparked market speculation over the Fed cutting its benchmark interest rate," Monex Investindo Future chief researcher Ariston Tjendra remarked in Jakarta on Friday.

The rupiah strengthened to Rp14,137 per US dollar, sitting 36 points, or 0.25 percent, stronger on Friday morning, than Rp14,173 per US dollar earlier.

Related news: Rupiah closes higher at Rp14,101 per dollar

Tendra said the US manufacturing index released by the Institute for Supply Management (ISM) contracted to a level of 47.8 in September. The below-50 level indicated a contraction.

The manufacturing index for September released by ISM is 52.6, lesser than 55.3 percent forecast by economists.

In the meantime, Automatic Data Processing (ADP) indicated that the number of workers employed by the private sector in the US increased 135,000 in September, somewhat lesser that the market estimate of 140,000.

He remarked that the market will lay emphasis on the other US manpower data, including non-farm payroll. If the reported result dips as compared to the previous month's data, market speculation over the Fed slashing its benchmark interest rate will get stronger, he stated.

"The Fed is scheduled to hold the Federal Open Market Committee (FOMC) meeting at the end of October, so its interest rate policy will be under the spotlight," he added. Related news: Rupiah strengthens against dollar on central bank's intervention