The currency closed at the level of 9,700 to the dollar from 9,676 at inter-bank transactions.
"Money market players feared that US budget cut by US$85 billion would slow the process of that country`s economic recovery and will strengthen the US dollar as a safe haven," Trust Securities` analyst Reza Priyambada said here on Monday.
Reza said the plan is that the budget cut would continue to reach up to US$1.2 trillion in 10 years.
The market has hoped that the cut in 2013 would not exceed US$50 billion.
However, rupiah fall would be curbed by internal sentiment with the central bank banning exporters to park their export earning in foreign banks.
In addition, the rupiah would also be shored up by the result of the recent auction of Indonesian sovereign bonds, which were oversubscribed.
The government raised Rp7.6 trillion from the auction exceeding the target of Rp7 trillion.
Meanwhile, chief researcher of Monex Investindo Futures, Ariston Tjendra, attributed the rupiah fall to negative sentiments from the euro zone.
Combination of negative European economic data , slower inflation and political instability in Italy drove up cost of loan for ailing economies in Europe.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2013
