Dollar triumphs over Rupiah, allegedly due to statement by Indonesian's Finance Minister. (Image via: CNBC Indonesia)

Rupiah Weakens, Finance Minister to Blame

Rupiah had to kneel in front of US dollar. By Friday (15/6) evening, Bank Indonesia’s Foreign Exchange Reference Rate tabulated that Indonesian Rupiah weakened to Rp.14,325 per 1 dollar. Compared to Thursday’s rate, it weakened by 45 points, previously it was Rp.14,280. Jakarta Interbank Spot Dollar Rate also tabulated the same weakening of Rupiah.

With the weakening, Rupiah had to go in groups with other Asian currencies having weakened against US Dollar. They are Indian rupee (-0,28%), Philippines peso (-0.26%), S. Korean won (-0,18%), Malaysian ringgit (-0.12%), Chinese RMB (-0.04%) and Singaporean dollar (-0.04%). Only Thai baht and Japanese yen that appeared stronger.

People were left in uproar and confusion of how this happened? Since by the reelection of Jokowi, many people hope that Rupiah will once again stand strong in front of US dollar.

Ariston Tjendra, head of research of Monex Investindo Futures, tabulated 3 main reasons why Indonesian Rupiah dove even further.

First reason was because foreign exchange reserves decreased from US$4 million to 120.3 million.

Second reason and also the main cause of the incident was due to the statement by Sri Mulyani Indrawati, Indonesian Finance Minister and former Managing Director at World Bank Group. In the Draft State Budget 2020 meeting during the discussion of macro assumption for Rupiah, Sri Mulyani stated that by 2020, the foreign exchange rate for dollar could go as high as Rp.15,000.

“Statement from a public official could affect rates,” according to Tjendra.

The third and the last cause was because there was a rumor that Bank of Indonesia will cut 7 Days Reverse Repo Rate (7DRRR).

Meanwhile, to break public sentiments, Tjendra stated that the ongoing Constitutional Court incident did not do any damage to Rupiah.

Source: https://www.cnnindonesia.com/ekonomi/20190614161835-78-403355/pernyataan-smi-dituding-tekan-rupiah-ke-rp14325-per-dolar-as