Indonesia's Financial Service Authority noted foreign capital out from the country reached US$953.47 million since the beginning of 2019 until May 17, 2019 - Photo: Pixabay.

JAKARTA (TheInsiderStories) – The U.S currency–which on Friday (20/4) was sharply higher against all world currencies including the Rupiah–broadly reinforced again on Monday (23/04).

Yesterday, the Indonesian rupiah is approaching the Rp14,000 per U.S dollar, the currency’s weakest position since mid-December 2015. On Monday, the local currency depreciated 0.59 percent to Rp13,975 against U.S dollar.

Considering not only the Indonesian Rupiah but also most other currencies are depreciating against the greenback, we assume that external factors are the reason behind the weakening of our currencies.

We saw, other factors that put pressure on the Rupiah are the traditional dividend payout season as well as foreign debt repayments conducted by local companies in the April-May period.

Just as it did on Friday, the strengthening of US$ is still triggered by rising U.S treasury bills yield approaching the psychological level of 3.0 per cent and reappearance of expectations of Fed Fund Rate increase more than 3 times during 2018.

The rise in yields and interest rates in the U.S itself was triggered by rising investor optimism about the country’s economic outlook as the economic data continued to improve and the tension of trade war between the U.S and China that took place during the year 2018.

Correspondingly, on Monday all the currencies of developed countries again weakened to US$, among others, JPY -0.25 per cent, CHF -0.27 per cent, SGD -0.35 per cent, and EUR -0.31 per cent.

Source: Reuters Currency Index

To maintain the stability of the Rupiah exchange rate in line with its fundamentals, the Indonesian Central Bank (BI) has intervened in both the foreign exchange market and the sovereign bonds market in considerable quantities.

In result, Rupiah which on Friday had depreciated by -0.70 per cent, on Monday it only weakened -0.12 per cent, lower than the depreciation that happened in other emerging market and Asian currencies such as PHP -0.32 per cent, India INR -0.56 per cent, Thai THB -0.57 per cent, MXN -0.89 per cent, and South Africa ZAR -1.06 per cent.

In its official statement on Apri 24, BI said it will continue to monitor and be aware of the risk of continuing weakening trend in the Rupiah exchange rate, both triggered by the global turmoil, the impact of U.S interest rate hikes, U.S-China trade wars, rising oil prices, and escalation of geopolitical tensions on the continuation of foreign outflows from the sovereign bonds market and shares of Indonesia.

Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) depreciated 0.65 percent to Rp13,894 per U.S dollar on Monday (23/04). This rate is expected to weaken further on Tuesday.