The fall of the US dollar index and treasury yield will potentially strengthen the rupiah.
Jakarta (ANTARA) - The rupiah's exchange rate to the US dollar traded at the Jakarta interbank market on Wednesday morning will potentially open positive as the US bond yields decline.

The Indonesian currency opened 15 points higher, or 0.1 percent, at Rp14.390 per dollar as compared to Rp14,405 during the previous trade's closure.

"The fall of the US dollar index and treasury yield will potentially strengthen the rupiah," Samuel Security Analyst, Ahmad Mikail, noted here on Wednesday.

Mikail remarked that the US dollar index will possibly weaken to 91.5 today, as the US bond yields plunged. However, it is forecast to become stable again, while optimism of the US small medium enterprises (UKM) remained low.

The NFIB Small Business Optimism Index appeared to weaken in February to reach 95.8, lower than its projected 96. This demonstrated that the optimism of lower-middle entrepreneurs in the US had not recovered toward its economic prospects.

In addition, the yield of 10-year US treasury note will potentially fall to 1.5 percent. The US bond bought by The Fed will lead to the decrease of long-term US Treasury. This also will push the trend of gaining bond yield since earlier this year.

"The market players expected that The Fed's policy to be effective in holding down a long-term UST yield through the UST purchase program. They are also awaiting the US CPI's data on February to look at the next inflation," Ahmad remarked.

The rupiah's exchange rate to the US dollar at the Jakarta Interbank Spot Dollar Rate (JISDOR) is forecast to be positive to reach Rp14,100 per US dollar.

On Tuesday (March 9), the rupiah closed 45 points lower, or 0.31 percent, to Rp14,405 per US dollar as compared to Rp14,360 per US dollar on the previous day.
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