Home Finance Fed Interest Rebate Plan Press Back Rupiah

Fed Interest Rebate Plan Press Back Rupiah

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Jakarta -The rupiah exchange rate against the US dollar (US) again moved weaker in trading earlier this week.

Citing Bloomberg, Monday (16/7/2018), the rupiah opened at 14,393 per US dollar, weakening compared to the previous close of trading at 14,378 per US dollar.

From morning till noon today, the rupiah is moving in the range of 14,387 per US dollar to 14,416 per US dollar. If calculated from the beginning of the year, the rupiah weakened 6.07 percent.

Meanwhile, based on Reference Rate Jakarta Interbank Spot Dollar Rate (Jisdor) of Bank Indonesia (BI), the rupiah was pegged at 14,396 to the US dollar, weakening compared to the benchmark last Friday at 14,358 per US dollar.

“The weakness in the beginning as the impact is still appreciating the rate of US dollar and still weakening Euro,” said CSA Research Institute senior analyst Reza Priyambada quoted from Antara.

Last weekend’s rupiah movement had weakened before finally able to move back positive.

The rupiah had weakened earlier in the day due to the weakening of the Euro and also the rise in inflation that triggered the perceived increase in interest rates of the Federal Reserve (the Fed).

On the other hand, although Bank Indonesia asked banks to withhold interest rate increases, Bank Indonesia also projected a trade balance surplus in June, making it quite positively responded.

Reza said, the movement of rupiah that began to appreciate is expected to re-occur as there is still a positive sentiment from within the country and can compensate for global sentiment.

“However, still depreciating other currencies against the US dollar should be wary of the impact on the rupiah,” said Reza.

The Financial Services Authority (OJK) said the value of developing country currencies compared to the United States dollar (US) is showing a trend of depreciation, one of rupiah. This is inseparable from the continued improvement of the US economy.

Chairman of the Board of Commissioners OJK Wimboh Santoso states, with various things happening in the world, especially in the US, making the rupiah has entered the new balance point (new normal). Currently the rupiah is perched above the level of 14,000 per US dollar.

“To respond to this incident, in addition to managing volatility, but there is a more fundamental way of giving space to the real sector so that the impact of new normality is not too heavy for the real sector,” Wimboh said on Wednesday (11/7/2018).

As the first weapon for rupiah stability, Bank Indonesia raised its benchmark interest rate by 50 basis points to 5.25 percent in June.

Indeed, with the increase in interest rates this sooner or later will make the interest savings and credit in the banking system also rose. Nevertheless, as one of the authorities in the financial industry, Wimboh asks the banks to minimize the impact that the increase is not directly perceived by customers.

How to create business efficiency and management. One of them is by maximizing technology and integration.

“The way to try to use technology so that the cost is not too large, more efficiency, so that not all of these interest rate hikes result in an increase in lending rates,” he explained.

As compensation from the interest rate increase, Wimboh continued, Bank Indonesia and OJK provide space in the housing sector through loosening of the Loan To Value (LTV) policy by freeing the advance on the first purchase.

Not only help people who do not have a home, the growth of the housing sector is also very important because it can move other sectors such as opening jobs for the community.

“This means that the government will receive benefits because tax revenues also rise, the house needs cement, it requires a lot more manpower,” he said.

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