Rupiah expected to be stable amid optimism about Indonesian economy

Rupiah expected to be stable amid optimism about Indonesian economy

Illustration: A staff shows banknotes in the denomination of Rp100,000 in a bank in Jakarta. ANTARA PHOTO/Yudhi Mahatma/ed/pd/pri.

Jakarta (ANTARA) - The rupiah exchange rate for interbank transactions in Jakarta, Thursday, is expected to be stable amid optimism about the Indonesian economy.

On Thursday, the rupiah opened down 12 points, or 0.08 percent, to Rp14,977 per US dollar as compared to the previous closing at Rp14,965 per US dollar.

"Today, we expect the rupiah to remain stable, not too much sentiment, and within the country it is still quite good, with the publication of investment data released this week can generate optimism for the stronger domestic economy," senior economist at Mirae Asset Securities Rully Arya Wisnuboroto stated when contacted by ANTARA in Jakarta, Thursday.

Investment realization in Indonesia throughout 2022 reached Rp1,207.2 trillion, which exceeded the target of Rp1,200 trillion set by President Joko Widodo (Jokowi), with the total employed reaching 1,305,001 million people.

This showed that investment realization during the January-December 2022 period reached 100.6 percent of the target and grew 34 percent as compared to 2021's achievement of Rp901.02 trillion.

Wisnubroto said that the sentiment of inflows of foreign capital in both Government Securities (SBN) and stocks can also give a boost to the rupiah.

Net inflow of foreign capital of Rp14.8 trillion was recorded on January 16-19, 2023, with majority having entered the SBN market. Foreign capital worth Rp14.49 trillion entered the SBN market, while foreign capital amounting to Rp300 billion entered the stock market.

Thus, on January 1-19, 2023, a net inflow of foreign capital of Rp36.33 trillion was recorded in the SBN market, but there was a net outflow of foreign capital of Rp7.94 trillion in the stock market.

Indonesia's five-year investment premium (Credit Default Swap/CDS) rose to a level of 87.21 basis points (bps) as of January 19, 2023, from 86.08 bps as of January 13, 2023.

Moreover, Wisnubroto said, external factors also offered a positive sentiment, where the Asian markets also moved quite positively, and overall, the US dollar tended to be in a weakening trend against other currencies, as seen from the trending US Dollar index.

"(This is) because of expectations that US interest rates will reach their terminal rate more quickly," he stated.

Wisnubroto estimates that the rupiah will move in the range of Rp14,865 per US dollar to Rp15,065 per US dollar.

On Wednesday (Jan 25), the rupiah closed down 78 points, or 0.52 percent, to the position of Rp14,965 per US dollar as compared to the previous closing of Rp14,888 per US dollar.

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