The rupiah rose after the Fed signaled a pause in interest rate hikes

Today we estimate that the rupiah will remain stable with a tendency to strengthen

Jakarta ( – The rupiah exchange rate (exchange rate) traded between banks in Jakarta at the start of Thursday’s trading rose after the United States (US) Central Bank or The Fed gave a signal to pause raising the benchmark interest rate.

On Thursday morning, the rupiah opened, increasing 107 points or 0.73 percent to the position of Rp. 14,585 per US dollar compared to the position at the previous close of Rp. 14,692 per US dollar.

“Today we expect the rupiah to remain stable with a tendency to strengthen. The main factor is the signal from the Fed to stop raising interest rates,” Rully Arya Wisnubroto, economist at Mirae Asset Sekuritas, told in Jakarta, Thursday.

Also read: Thursday’s Rupiah increased by 107 points to IDR 14,585

The dollar slipped against most of the other major currencies early in the Asian session on Thursday morning, after the US Federal Reserve opened the door for a break in its aggressive tightening cycle, although markets were buffeted by risk aversion amid a crash in US regional bank stocks.

The Fed on Wednesday (3/5/2023) raised its benchmark interest rate overnight by a quarter percentage point, as expected, but in doing so removed the language of its policy statement that it “anticipated” further rate hikes would be required.

That sent the US dollar broadly lower and government bond yields sliding, with traders taking the comments as a signal a peak in US interest rates had been reached and moving towards a rate cut later this year.

Rully estimates that there is a high chance that US interest rates will be held at 5.25 percent at the Federal Open Market Committee meeting or the US Central Bank’s policy meeting board in June 2023.

Meanwhile from within the country, he said the market was waiting for the release of first quarter 2023 Gross Domestic Product data.

He projects that the rupiah will be traded in the range of IDR 14,665 per US dollar to IDR 14,725 per US dollar.

On Wednesday (3/5) the rupiah closed up 22 points or 0.15 percent to the position of Rp. 14,692 per US dollar compared to the position at the previous closing of Rp. 14,714 per US dollar.

Also read: The rupiah strengthened as the market waited for the US interest rate policy

Reporter: Martha Herlinawati Simanjuntak
Editor: Ahmad Wijaya


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