Market participants are concerned that both sides - the Greek government and its Eurozone creditors - are still far from reaching an agreement to bail out Greece (hence preventing a “Grexit” from the euro). This turmoil has placed serious pressure on the euro currency. Apart from the Greek debt situation, the euro is weakening (long-term) against the US dollar as the European Central Bank unfolded its quantitative easing program, while the Federal Reserve is expected to raise the US interest rate environment before the end of the year.

The Greek government announced on Monday that it had repaid about 750 million euros to the International Monetary Fund (IMF). However, there has still not been a clear breakthrough in negotiations between Greece and its creditors and therefore markets worry that Greece will eventually run out of financial resources and defaults on its debt.

The US dollar is also strengthening because US job growth rebounded in April 2015 as nonfarm payrolls increased 223,000, while the US unemployment rate dropped to a seven-year low of 5.4 percent.

Economist Destry Damayanti expects that the Indonesian rupiah will remain in the range of IDR 13,000 to IDR 13,400 per US dollar this year, far above the IDR 12,500 that is targeted by the Indonesian government in the (revised) 2015 State Budget. According to Damayanti the rupiah can only improve markedly provided that the government shows that it makes serious progress with its infrastructure development plans.

Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.66 percent to IDR 13,203 per US dollar on Tuesday (12/05).

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia