The rupiah slumped on fears of the US debt ceiling

On Friday afternoon, the rupiah closed down 29 points or 0.20 percent to IDR 14,751 per dollar.

Jakarta ( – The rupiah exchange rate traded between banks in Jakarta at the end of Friday’s trading slumped amid the strengthening of the US dollar index due to concerns over the debt ceiling of the United States (US).

On Friday afternoon, the rupiah closed down 29 points or 0.20 percent to Rp. 14,751 per US dollar compared to the position at the previous close of Rp. 14,722 per US dollar.

“The rupiah has turned weaker today against the US dollar. The movement of the dollar index, which measures the strength of the dollar against six major world currencies, has strengthened to a level of 102 since last night,” said money market observer Ariston Tjendra in Jakarta, Friday.

Ariston said the strengthening of the US dollar was influenced by the position of the dollar as an asset safe haven which the market is concerned about debt ceiling issues (debt ceiling) US and US banking conditions as well as China’s economic slowdown.

The strengthening of the US dollar could also be due to indications that the US central bank or the Fed have not considered the option of cutting their benchmark interest rate.

US Treasury Secretary Janet Yellen on Thursday (11/5/2023) urged Congress to raise the US$31.4 trillion federal debt limit and prevent an unprecedented default that would trigger a global economic downturn.

Concerns about the US regional banking crisis increased after PacWest Bancorp shares plunged 23 percent on Thursday (11/5/2023).

The Los Angeles-based lender said its deposits were declining and had posted more collateral to the US Federal Reserve to increase its liquidity.

The US federal government could run out of money to pay its bills as early as June 1, the Treasury Department said, unless the debt ceiling is raised.

Detailed talks on increasing the $31.4 trillion US government debt ceiling began Wednesday (10/5/2023) with Republicans continuing to insist on spending cuts, a day after Democratic President Joe Biden and Republican Kevin met on the matter to the first time in three months.

The International Monetary Fund (IMF) said on Thursday (11/5/2023) that a US debt default triggered by a failure to raise the country’s debt ceiling would have “very serious repercussions” for the US economy as well as the global economy, including possible borrowing costs. higher.

Meanwhile, concerns about weak demand in China are also keeping investors cautious.

China’s April consumer price data rose at a slower pace and missed expectations, while factory-gate deflation deepened, suggesting more stimulus may be needed to fuel a patchy post-COVID-19 economic recovery.

In the morning, the rupiah opened down to Rp. 14,762 per US dollar. Throughout the day the rupiah moved in the range of Rp. 14,736 per US dollar to Rp. 14,770 per US dollar.

Meanwhile, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) exchange rate on Friday weakened to the position of IDR 14,752 per US dollar compared to the previous position of IDR 14,722 per US dollar.

Also read: Dollar holds steady in Asia, traders bet Fed will stop rising
Also read: Rupiah weakens as investors watch US producer inflation data
Also read: Friday morning Rupiah fell to IDR 14,766

Reporter: Martha Herlinawati Simanjuntak
Editor: Click Dewanto


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