After this analysis of the last series was released, Rupiah again depressed, even briefly touching 14.784 per US dollar on September 29. The development of depreciation of the currency of the Republic of Indonesia is already very far beyond its fundamental basis, making it difficult to estimate again, until when these conditions will last.
Indonesian government and Bank Indonesia has launched two new stimulus plan with a focus on boosting industrial competitiveness through deregulation, accelerate the strategic programs, and sustain the rupiah exchange rate. But until a few days after the release of the second stimulus package, the market has not been responding. On the one hand, the policies are not expected to have a big impact in the near future to support the rupiah. While on the other hand, the market is looking forward to the execution of these policies.
Meanwhile, concerns about the impact of the depreciation of the rupiah against foreign corporate debt continues to mount. In mid-September, S & P said that the Indonesian companies would have trouble repaying foreign debts them if touched 15,000 rupiah per US dollar due to high foreign currency exposure on a non-hedging. Last night, the same concerns reviewed by the Financial Times international business media. Quoting economist of Deutsche Bank Research and Moody's, the Financial Times revealed the high private sector debt that will mature in the short term and the lack of hedging makes some companies, especially developers, it becomes vulnerable.
Rupiah 'comeback' at the end of last week and opened slightly higher at 14.640 per US dollar this morning (5/10) after the release of US economic reports disappointed the market. The report shows the increase of labor US non-farm sector which plummeted and stagnant wage growth, whereas employment data was one consideration US central bank, the Fed, in a plan to raise its interest rates. Earlier, the Fed officials said that there is a possibility they will raise interest rates in October or December, as employment conditions in the country are expected to improve. With worsening employment data, the market lost hope. Meanwhile, two other factors were also observed: inflation and international economic conditions, they have not shown significant improvement.
These recent developments are worth noting, but has not changed the fundamental background behind the weakening of the rupiah today, including:
The possibility of the Fed interest rate will be raised this year, between October or December.
Asian market conditions and developing countries today are still unfavorable, especially due to the economic slowdown in China.
The low price of commodities in the international market today, while Indonesia relied on exports of raw materials.
Bank Indonesia has a very narrow space to act in the middle of the dilemma of national economic slowdown and the depreciation of the rupiah and foreign exchange inventories depleted.
The high short-term foreign debt accumulated private sector.
Besides reports the latest Indonesian economy is also quite alarming. The business climate in the manufacturing sector in September was reported still depressed by the continued decline in the number of employees, output, and orders. Meanwhile in the same period, core inflation jumped. The data that came out last week, indicating that the domestic industry is still constrained. In this situation, Indonesia's GDP growth in the third quarter remained slow feared.
Fundamental This Week
Earlier this week, the rupiah exchange rate opened at 14.640 per US dollar in the currency market (monitoring TradingView) with a tendency to strengthen. Apparently, the disappointment will be the US employment report is still affecting the market sentiment, but market participants will still monitor the other economic reports to be released this week.
From within the country, the release schedule of the Central Statistics Agency (BPS) is empty, while Bank Indonesia is quite dense schedule. Two of data that deserves to be monitored is foreign reserves that will be published on September 7 and the survey report that retail sales in August will be released on 8.
From the United States, a number of medium-strong impact of data to be published, including the Non-Manufacturing ISM PMI, the trade balance, jobless claims, and the minutes of the FOMC meeting the Fed. Even so, the data is unlikely to have a major impact in turning increasingly pessimistic market sentiment that the Fed rate hike can be done in this year.
Officials of central banks of Australia, Japan, Europe, and the United Kingdom are also scheduled to deliver policies or their views in the coming days. Here it should be noted that there is the possibility of the central bank-other central banks will loosen their stimulus along with the prolonged speculation about interest rate hikes by the Fed. When that happens, the dollar may strengthen back.
Prediction Rupiah This Week
Technically, if it still will continue its bullish pace, then the USD / IDR in the upcoming week has the potential to return to the range 14,700an. On the other hand, there is always an opportunity to strengthen, given two weeks ago rupiah was traded in the range 14,400-14,500an.
USDIDR
Chart USD / IDR on the Daily timeframe with some indicators stochastics and Fibonacci retracement
It may be noted that the current exchange rate floating near fibo 38.2%. This means there are opportunities to move to 14.401, although most likely will bounce back towards 14.784. Prediction neutral from the range of movement of the rupiah exchange rate within the next two weeks is between 14.545 to 14.784 per US dollar. While optimistic predictions move towards 14.401 Rupiah can be achieved if the rate of 38.2% fibo penetrate.
Archive Analysis by: A Muttaqiena
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