Rupiah appreciates before BI announces its meeting results

Rupiah appreciates before BI announces its meeting results

Illustration -An employee of money changer checked rupiah and US dollar banknotes (ANTARA FOTO/PUSPA PERWITASARI)

Jakarta (ANTARA) - The rupiah strengthened against the US dollar in the Jakarta interbank market on Thursday morning before declaration of the result of the meeting of Bank Indonesia’s (BI's) Board of Governors in the afternoon.

The rupiah appreciated four points, or 0.03 percent, to Rp13,984 per US dollar as compared to the earlier close of Rp13,988 per US dollar.

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Chief researcher of Monex Investindo Futures Ariston Tjendra stated in Jakarta on Thursday that BI will possibly follow the Federal Reserve’s (Fed's) suit to not change its interest rate.

"What is more, the meeting of BI's board of governors has thrice slashed its interest rate this year. Of course, Bank Indonesia will evaluate the impact (of its decision) on the national economy," he stated.

The central bank is expected to maintain the BI 7-Day Reverse Repo Rate (BI7RR) at five percent during the meeting of its board of governors in December 2019 on the assumption that the inflation rate can be kept under control and the rupiah's exchange rate against the US dollar remains stable.

The other rationale is that the BI is yet able to hold the current account deficit and that in the third quarter of 2019 it will remain healthy at 2.7 percent of the national gross domestic product (GDP) in comparison with 2.9 percent of the GDP in the earlier quarter.

Related news: Current account deficit problem will be resolved in four years: Jokowi

On the external side, the Fed will yet maintain its interest rate at a range of 1.5-1.75 percent even during the next year.

It appears that the market will adopt a cautious approach in responding to developments in the trade agreement evident from the slight movement of the rupiah since early this week.

"However, market optimism over the trade agreement remains under control. The White House hinted that the first phase of agreement will be signed in early January 2020," he added.

Related news: Rupiah strengthens as BI's interest rate declined

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