"The rupiah still moves negatively over worry about high inflation rate."Jakarta (ANTARA News) - The rupiah weakened 30 points to Rp9,775 against the US dollar on Thursday evening on expectation of higher inflation.
"The rupiah still moves negatively over worry about high inflation rate. The effort to contain the inflation fueled by rising prices of foodstuffs has shown no signs of significant results, causing expectation of higher inflation to continue," economist Lana Soelistianingsih of Samuel Sekuritas said here on Thursday.
The risk of continued inflation hike is still open pending the government`s policy on subsidized fuels, she said.
Even though President Susilo Bambang Yudhoyono had given the assurance that the government would not raise the prices of subsidized fuels this year, the policy to limit the use of subsidized fuels would have an impact on the inflation, she said.
However, she added the impact would not be as big as that of fuel price hike.
In addition, the trade deficit of US$327.4 million in February had reduced the country`s foreign exchange reserves which would in turn have an impact on the rupiah`s exchange rate, she said.
"We predict the trade deficit will continue amidst the poor performance of non-oil/non-gas exports, particularly commodity-based exports," she said.
The rupiah traded at Rp9,775 in the Jakarta interbank spot market on Thursday evening against Rp9.745 per dollar the day before.
(Reporting by Zubi Mahrofi, editing by Suharto, check editing by A. Abdussalam)
Editor: Priyambodo RH
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