The Indonesian rupiah exchange rate continued its recent depreciating trend on Wednesday (28/05). According to the Bloomberg Dollar Index, the currency had depreciated 0.46 percent to IDR 11,633 against the US dollar at the end of the trading day. The rupiah's performance is in line with the general trend in Asia where most currencies lost ground to the greenback on today's trading day. As various US economic data indicate a continued recovery of the US economy, the market expects more US monetary tightening.
US durable goods orders unexpectedly increased by 0.8 percent in April 2014 (analysts expected a 0.7 percent decline). Moreover, prices of single-family US homes sold in March 2012 rose 0.2 percent (S&P/Case-Shiller US National Home Price Index), while the 10-City and 20-City Composite Indices posted gains of 0.8 percent and 0.9 percent, respectively. Lastly, US consumer confidence increased to 83 in May 2014 from a downwardly revised level of 81.7 in the previous month.
These data are evidence of a continuation of the US recovery momentum and this means that the Federal Reserve will probably continue the winding down of its bond-buying program as well as increasing interest rates in 2015. For emerging Asian currencies, including the rupiah, this provides negative market sentiments.
Furthermore, market participants are waiting for Indonesian economic data (inflation, manufacturing and trade statistics) that will inform further about the current state of the economy. These data will be released on Monday 2 June 2014 by Statistics Indonesia.
Trade volume is low this week because of two religious holidays (Tuesday and Thursday Indonesia's financial markets are closed).
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.17 percent to IDR 11,613 against the US dollar on Wednesday (28/05).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia