Indonesia rupiah weakens above 10,000 to the dollar

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Money changer
Mobile money changer in Jakarta

For the first time since 2009, the Indonesian currency crossed the 10,000 rupiah barrier to the US dollar on July 15 according to Bloomberg data.

At around noon Indonesian time, the rupiah stood at 10,018, up 27 rupiahs, to the US dollar. Reasons are sustained dollar demand from local companies, traders said, due to concerns about the accelerating inflation. Also, the central bank is suspected of providing dollar liquidity.

The rupiah is one of many emerging market currencies that has weakened since Federal Reserve Chairman Ben Bernanke talked in May about the possibility of beginning to reduce US monetary stimulus.

Adding to the pressure on the rupiah have been Indonesia’s hefty current account and budget deficits. To help contain them, the government in late June 2013 raised domestic fuel prices – a move that has increased the inflation rate.

On July 11, Bank Indonesia surprised the market by raising the benchmark policy rate by 50 basis points to 6.50 per cent, double the expected increase, after it already increased the rate 25 basis points in June, becoming the first Asian central bank to hike rates since 2011.

The annual inflation rate is expected  to hit 7.5 per cent in July.

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Reading Time: 1 minute

Mobile money changer in Jakarta

For the first time since 2009, the Indonesian currency crossed the 10,000 rupiah barrier to the US dollar on July 15 according to Bloomberg data.

Reading Time: 1 minute

Money changer
Mobile money changer in Jakarta

For the first time since 2009, the Indonesian currency crossed the 10,000 rupiah barrier to the US dollar on July 15 according to Bloomberg data.

At around noon Indonesian time, the rupiah stood at 10,018, up 27 rupiahs, to the US dollar. Reasons are sustained dollar demand from local companies, traders said, due to concerns about the accelerating inflation. Also, the central bank is suspected of providing dollar liquidity.

The rupiah is one of many emerging market currencies that has weakened since Federal Reserve Chairman Ben Bernanke talked in May about the possibility of beginning to reduce US monetary stimulus.

Adding to the pressure on the rupiah have been Indonesia’s hefty current account and budget deficits. To help contain them, the government in late June 2013 raised domestic fuel prices – a move that has increased the inflation rate.

On July 11, Bank Indonesia surprised the market by raising the benchmark policy rate by 50 basis points to 6.50 per cent, double the expected increase, after it already increased the rate 25 basis points in June, becoming the first Asian central bank to hike rates since 2011.

The annual inflation rate is expected  to hit 7.5 per cent in July.

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