Illustration of Rupiah. (CNN Indonesia / Hesti Rika)

Alarming Global Sentiment, Rupiah Weakened to 0.3%

Jakarta, Indonesia - It is reported by Bank of Indonesia (BI) Jakarta Interbank Spot Dollar Rate (JISDOR) that Rupiah has weakened to IDR 13,985 per USD on Tuesday (7/23) or 0.3% compared to Monday's closing (7/22), which was Rp. 13,943 per US dollar. However, today, Rupiah exchange rate is on the range of Rp13,955 per USD to Rp13,986 per USD. According to the source, there are two causes of the weakening of Rupiah.

First, the possibility of Boris Johnson becoming the British Prime Minister is increasingly open. This is frightening for market players, considering Johnson plans to divorce Britain from the European Union next October without any trade agreement or Brexit no-deal.

Boris Johnson is an euro-skeptic or anti-EU figure and is a front man for the UK June 23, 2016 referendum which resulted in a surprising decision as the majority of Britons, who participated in the vote, decided to out of the European Union.

Second, because the geopolitical conditions in the Middle East that has provoked market players to move their assets to safe haven such as the US dollar. The fierce tensions between the US and Iran are also the cause of this issue after Iran began to oversee all the ships that went in and out of the bay area near US territory.

Ibrahim also stated that if the tension continues to be high, it is not impossible that there are parties who made mistakes and the risk of armed conflict or war cannot be erased and might happen as well. This certainly makes market participants and investors anxious and unwilling to take risks in investing in several stocks and markets.

Apparently, not only Rupiah, most of the major Asian currencies weakened against the US dollar. The Indian rupee weakened 0.03 %, the South Korean won weakened 0.06 %, the Philippines peso weakened 0.11 %, and the Malaysian ringgit weakened 0.12 %.The Thai baht weakened 0.22 %, the Singapore dollar weakened 0.22 %, and the Japanese yen weakened 0.29%.

However, on the other hand, the Hong Kong dollar strengthened 0.01 % and the Chinese yuan rose 0.03 %, making China currencies increased and in good positions.