Normalizing Interest Rate

Last week, the rupiah strengthened against the US dollar over three to four consecutive days, giving fresh hope that Bank Indonesia would not raise its benchmark interest rate (the 7-Day Reverse Repo Rate) during the board of governors meeting this week.

KOMPAS/PRIYOMBODO

An employee of money changer PT Valuta Artha Mas serves a customer buying foreign currency in Jakarta, Monday (17/9/2018). Based on the Jakarta interbank spot dollar reference rate, the rupiah changed hands at Rp 14,859 per US Dollar on Monday (17/9).

Last week, the rupiah strengthened against the US dollar over three to four consecutive days, giving fresh hope that Bank Indonesia (BI) would not raise its benchmark interest rate (the 7-Day Reverse Repo Rate) during the board of governors meeting this week.

However, on Monday, the US dollar suddenly strengthened against nearly all currencies, including the rupiah, which traded at Rp 14,867 per US dollar. Among Asian currencies, the US dollar rose 0.36 percent against the rupiah, weaker than the Korean won (0.46 percent) but higher than the Indian rupee (0.31 percent), the Thai baht and Taiwan dollar (0.22 percent each), the Philippine peso (0.18 percent), the Chinese yuan and the Malaysian ringgit (0.15 percent each) and the Singapore dollar (0.14 percent). The exchange rate remained unchanged for the Hong Kong dollar and the Japanese yen.