DIRECTOR of PT Laba Forexindo Berjangka, Ibrahim Assuaibi, said that in this afternoon’s trading, Tuesday (6/8), the rupiah closed up 24.5 points to Rp16,164.5 per United States (US) dollar.
This strengthening occurred after the rupiah weakened at the previous closing level of Rp16,189.
“In this afternoon’s trading, the rupiah currency closed stronger after previously closing weaker at Rp16,189,” he said in an official statement.
According to Ibrahim, several factors caused the US dollar index to weaken, one of which was weaker-than-expected US jobs data.
Data showed the unemployment rate soaring, increasing expectations for a Fed rate cut.
The sell-off continued on Monday (8/5), with US Treasury yields falling further, stock indexes in the red, and the dollar weakening.
Also read: Rupiah Strengthens as Market Waits for US Interest Rate Policy
Return on investment Treasury has fallen sharply since last week when the Fed kept its policy interest rate in a range of 5.25% to 5.50% and left open the possibility of a rate cut in September.
Additionally, disappointing earnings reports from big tech companies and growing concerns about the Chinese economy have fueled a global selloff in stocks, oil and high-yielding currencies in the past week. Investors are seeking the safety of cash.
The Japanese yen’s surge also came as traders aggressively unwound carry trades, a type of foreign exchange trading that involves borrowing money in one currency at a low interest rate to fund investments in higher-yielding assets elsewhere.
Also read: Rupiah continues to decline along with expectations of a US interest rate drop
From internal factors, the strengthening of the rupiah is supported by the government’s statement that it will boost consumption in the third and fourth quarters of 2024 to encourage economic growth at the end of the year.
Government consumption in the second quarter of 2024 slowed down, with growth of 1.42% and a contribution to gross domestic product (GDP) of 7.31%.
“The government wants to mobilize the sector outside the government to encourage economic growth,” explained Ibrahim.
The strengthening of the rupiah provides a breath of fresh air for the Indonesian economy amidst global economic uncertainty. The government and market players continue to monitor developments in the situation to take strategic steps to maintain economic stability. (Z-10)
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