US Dollar Rises on Fed minutes and US Employment Data; Rupiah Down
On Thursday (09/01), the US dollar appreciated after the release of the minutes of the FOMC’s December meeting as well as positive US employment data. The minutes show that Federal Reserve policy makers are confident that the economy is strong enough to start scaling back its quantitative easing program, although the minutes do not provide a clear schedule about the tapering. Yesterday (08/01), it was also released that private-sector payrolls increased by 238,000 positions in December 2013.
Both the content of the minutes and US employment data had a positive impact on the performance of the US dollar. On Thursday morning (09/01), the US dollar appreciated against most Asia-Pacific currencies, including the Indonesia rupiah exchange rate. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.16 percent to IDR 12,255 per US dollar at 13:01 local Jakarta time.
Regarding domestic factors, market participants are still waiting for the outcome of Bank Indonesia's Board of Governor's meeting which is held today (09/01). Most analysts expect that the central bank will maintain its benchmark interest rate (BI rate) at 7.50 percent. If the BI rate is not raised, then the rupiah will lack domestic factors that can support the currency.
This week's oversubscribed global bond sale, through which Indonesia raised USD $4 billion, is regarded as a positive sign but not expected to be able to support the rupiah significantly.
Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) depreciated 0.28 percent to IDR 12,263 per US dollar on Thursday (09/01).
Will the change in Federal Reserve leadership influence the Indonesia rupiah exchange rate?
The change in leadership of the Federal Reserve later this month (Janet Yellen will replace Ben Bernanke) is not expected to lead to a sudden policy change of the US central bank. Yellen is estimated to wind down the quantitative easing program gradually. It is also unlikely that she will raise interest rates yet. Therefore, the leadership change at the Federal Reserve is not expected to impact on the Indonesia rupiah exchange rate.
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