Indonesia’ foreign exchange reserves slightly up to US$137.0 billion in August from previous month stood at $135.1 billion, Bank Indonesia reported today - Photo: Privacy

JAKARTA (TheInsiderStories) – The rapid capital inflow into Indonesia made the Rupiah stronger below 14,000 against the US Dollar. While the Renminbi was under pressure due to the tension of China with the United States (US).

On Friday, the local currency jumped 1.49 percent to 13,850 against the Greenback while Yuan at 7.08 versus US Dollar. Investors give a positive reactions to to the new normal life in the midst of the COVID-19 pandemic and put their funds back in emerging markets, including Indonesia.

The heavy inflows into the country can be seen from the auction of state bonds on Tuesday whose showed the offer reached Rp105.27 trillion (US$7.52 billion) from the indicative targets Rp20 trillion, which means there were 5.2 oversubscribed times.

Chief Economist of PT Bank Permata Tbk, Josua Pardede as quoted by local media said, the weakening of the US Dollar by 1.56 percent over the past week was mainly due to accumulation of expectations from investors regarding the reopening of the economy in various Asian countries. Most Asian currencies, he note have strengthened this week, except for the Japanese yen.

He continued, further strengthening of the Rupiah caused the investors moving their assets from the Indian market after Moody’s Investor Service downgrade the counry rating from Baa2 to Baa3 and downgrading its outlook from “stable” to “negative”. Moody’s cut inline with S&P and Fitch, who each downgraded India’ rating to BBB-, after a surprising increase in November 2017.

While within the country, the strengthening of the Rupiah tends to be caused by the start of the transition to open the large-scale social distancing in a number of regions, such as in DKI Jakarta. Pardede noted, during the week, the local currency has strengthened by 4.75 percent, the highest in Asia.

Previously, governor of Bank Indonesia, Perry Warjiyo believed that Indonesia could be back to level 13,000 level due to various policies by the policymakers and government. He confessed, the central bank has succeed making Rupiah movements stable from 16,400 in April to around Rp14,000 a US Dollar these day through various monetary actions.

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