BI optimistic of rupiah strengthening against US dollar

BI optimistic of rupiah strengthening against US dollar

Illustration - An officer shows rupiah and dollar banknotes at the BNI Head Office in Jakarta ANTARA FOTO/Yudhi Mahatma/ss/ama

Several areas in the United States have begun their economic activities.
Jakarta (ANTARA) - Bank Indonesia (BI) is buoyant about the rupiah strengthening to below Rp15,000 per US dollar during Wednesday's trading on the back of several factors, including expectations of the US economy recovering from the COVID-19 pandemic.

"Several areas in the United States have begun their economic activities," BI Governor Perry Warjiyo stated in an online press statement on Wednesday.

Warjiyo noted that the Fed had also projected an improvement in the US economy in the second semester of 2020 after reeling from recession in the previous semester.

The Fed statement will offer a positive impetus to the rupiah's exchange rate against global currencies, he noted.

Apart from the US, businesses in several regions in Europe have resumed economic activities, coupled with the rising global crude prices believed to be the trigger behind the rupiah's strengthening, he explained.

Several negative factors, including the US-China dispute over the novel coronavirus disease and the injection of liquidity funds from central banks in Europe, continue to cast a shadow on the movement of the rupiah, he pointed out.

"However, for us, looking at the trend of fundamental factors is more preferable since this will determine its direction in future, so we will gain a broader understanding of the rupiah's movement," he remarked.

Fundamental factors are the low inflation rate and low current account deficit projected at below two percent of the national gross domestic product in the past year, he noted.

Moreover, yield on the 10-year state debt securities had reached 8.02 percent, or higher than the US offered at 0.3-4 percent, he stated.

"Looking ahead, it will continue to strengthen to up to Rp15,000 per dollar at the end of this year, he remarked.

The rupiah soared 20 points, or 0.13 percent, to touch Rp15,060 per US dollar in the Jakarta interbank market on Tuesday morning, from Rp15,080 per dollar earlier.
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