On Monday morning, it opened down 30 points, or 0.19 percent, to the position of Rp15,183 per US dollar as compared to the position at the previous closing of Rp15,153 per US dollar.
"The rupiah exchange rate has the potential to weaken against the US dollar today due to market concerns over the escalation of the banking crisis," money market observer Ariston Tjendra said when contacted by ANTARA in Jakarta, Monday.
Tjendra noted the news about the increase in credit default swap fees for one of the large European banks, Deutsche Bank, due to fears of default in the midst of a banking crisis and reports regarding deposit withdrawals by customers at small United States (US) banks added to concerns that the banking crisis still has the potential to spread.
He believes this could push market players into safe assets again and could weigh on the rupiah.
Concerns over the potential contagion outside regional banks threaten to spread to their larger counterparts were fueled by a sell-off in European bank shares.
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The sell-off was driven by rising costs to insure Deutsche Bank's debt, as was demonstrated by credit default swaps, which came after the state-sponsored purchase of Credit Suisse, entered into a sector-wide pressure narrative.
Global banking shares have been battered all month after the sudden collapse of two US lenders and the rescue of struggling Swiss bank Credit Suisse last week, with authorities stepping in to ease investor jitters.
Moreover, Tjendra stated the strengthening of the rupiah against the US dollar in trading on Friday (Mar 24) amid market worries created opportunities for correction.
On the other hand, expectations are that the Fed will not be aggressive in raising its benchmark interest rate this year, as the banking crisis in the US is still helping to push up other exchange rates against the US dollar, so if concerns about the crisis subside, then the US dollar could be under pressure again.
Tjendra projects there will be opportunities for pressure on the rupiah to reach Rp15,200 per US dollar, with the potential to be held at around Rp15,100 per US dollar.
On Friday (Mar 24), the rupiah closed up 192 points, or 1.25 percent, to Rp15,153 per US dollar as compared to the position at the previous close of Rp15,345 per US dollar.
Related news: Rupiah expected to be stable amid optimism about Indonesian economy EDITED BY INE
Translator: Cindy Frishanti Octavia
Editor: Jafar M Sidik
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