Rupiah exchange weakens following global trend: Economist

Jakarta (ANTARA News) - Rupiah exchange weakening is still following the global trend where every currency also weakens against the US dollars because the improving US economy signs, an economist said.

"The NYSE (New York Stock Exchange) stock price index also experiencing rally recently, which causing the US dollars strengthening or the opposite, weakening rupiah," said Economist from the Gadjah Mada University Toni A Prastiantono here, Tuesday.

Besides, the Rupiah exchange weakening also caused by the Indonesian economy performance which must be admitted to be rather slower.

"We are not alone, because China is also slowing. Their economic growth in Q2 (second quarter) is only 7.4 percent. BY the end of 2013 China is expected to grow only 7.5 percent," he said.

Toni said the global economic slowdown has affected the absorption of Indonesian products plummeted, so that Indonesia`s trade deficit increase.

The Indonesian trade deficit of 1.6 billion U.S. dollars (Rp16 trillion) in 2012, then by the end of 2013 is expected to increase to 4 billion US Dollars, and feared can deplete the foreign exchange reserves, said Toni.

"Honestly, the decline of seven billion US dollars foreign exchange reserve in a month (on June 2013 ) has caused relatively nervous financial markets, so that the fund owners start to seek for US dollars," said Toni.

Despite the Indonesian Central Bank, Bank of Indonesia, has raised the benchmark interest rate (BI rate) by 50 basis points from 6 percent to 6.5 percent, Rupiah is still weakened.

"Although the BI rate has gone up, the rupiah still weakened to Rp10.036 to the U.S. dollar," he said.(*)