Indonesian Rupiah Exchange Rate Depreciated 0.62% on Iraq Violence
The Indonesian rupiah exchange rate depreciated 0.62 percent to IDR 11,893 per US dollar on Tuesday (17/06), a four-month low. The main reason behind this poor performance is increased concern about the impact of violence in northern Iraq - namely higher global oil prices - on Indonesia’s trade and budget deficits as Indonesia subsidises a significant amount of domestic fuels). As oil and gas imports accounted for about 23 percent of total imports of Indonesia in April 2014.
Moreover, the Federal Reserve started its two-day meeting today. The institution is expected to continue winding down the bond-buying program, thus causing a stronger US dollar.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.28 percent to IDR 11,814 against the US dollar on Tuesday (17/06).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia
Bloomberg reported that Indonesia rejected bids for six- and 29-year Islamic bonds at an auction on Tuesday (17/06) and sold IDR 185 billion (roughly USD $15.6 million) of six-month bills, short of its IDR 1.5 trillion target. This sale is evidence of the government’s confidence of meeting its financing goal even after it revised the budget deficit to 2.4 percent of the country’s gross domestic product (GDP), from 1.69 percent previously.