JAKARTA (TheInsiderStories) – Bank Indonesia (BI) has intervened the foreign exchange market to stabilize Rupiah after plunged near to Rp14,000 over the Greenback. This noon, the local currency dropped to Rp13,960 and middle rate of BI at Rp13,961 compared to US Dollar.
Beside intervene the forex market, the central bank also intervened Non Delivery Forward and bond markets to guard the stability. On Monday the American Dollar and Rupiah pair extends its retreat from six-day highs of Rp13,970 to now trade near 13,958.50 levels.
Last week, Rupiah was closed down 0.27 percent to 13,930 a US dollar. This comes after the Asian currencies fell sharply on rising oil prices, in the wake of heightening United Stater (US) – Iran geopolitical tensions.
Until Friday (01/03), Indonesian market has been moving varied. The stock market is still depressed, the Rupiah is stagnant, and the bond market is strengthening.
The Jakarta Composite Index (JCI) fell 0.09 percent in a point-to-point basis during the week, while the 10-year tenor reference series government bonds’ price decreased to 7.06 percent. The weakening in the stock market is a sign of risky instruments tend to be avoided, while instruments that provide investment returns are still considered safer so that prices rise.
In the first session, the stock index corrected 0.58 percent to 6,288.81 compared to last week. The lowest point of the JCI today is at the level of 6,225.64, implying a correction of 1.12 percent when compared to the position on Friday.
No wonder investors are starting to aim their shots at safer investment instruments, due to the current conditions of geopolitical relations between United States and Iran which have been heating up in recent days.
Beside financial market, oil prices also spiked after the US killed a leading Iranian military commander General Qassem Soleimani in an air strike, heightening fears of a conflict in the Middle East that could disrupt energy supplies. US crude rose 3 percent and global benchmark Brent jumped 3.6 percent to more than US$68 a barrel.
At the same time, gold prices rose to the highest level in more than six years. In the spot market, gold prices rose 2.3 percent to $1,588.13 per troy ounce, the highest level since April 2013, and traded 1.5 percent at $1,575.36 at 7.22 Singapore time.
In addition, global markets could remain under pressure in the coming days, with analysts expecting to see defensive stocks outperforming, downward pressure on treasury yields and gains for safe-haven currencies.
Wall Street’ major indexes fell from record highs on Friday, with the S&P 500 sliding 0.7 percent, snapping five weeks of gains for the index. Besides the escalation in Middle East tensions a bigger-than-expected contraction in the US manufacturing sector raised concerns of slowing economic growth.
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