Can Rupiah Survives From The FED Decision?

Can Rupiah Survives From The FED Decision?

By: M.Dinata *)

The US Federal Reserve (The Fed), intend to raise its interest rate which never been moved from its stance since the US financial crisis in 2008. No more “patience” word in its statement released at the end of its two-day policy meeting in Washington, DC. The consideration came up after it warned that US economic growth was disappointing since January.

The Fed officials said that the raise of the interest rate will wait for the further information in the US labour market and it also stated that “this change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase”. The chair of the Federal Reserve, Janet Yellen, said in the press release, “Just because we removed the word patient from the statement doesn’t mean we’re going to be impatient.”

Same analysis come from Ward McCarthy, chief US economist at Jefferies says, “At the current juncture, the timing of the liftoff is still indeterminate and will depend upon the inflation data. The policy statement eliminated the use of ‘patient’ in forward guidance, but the FOMC also described the new forward guidance as being “consistent” with the prior forward guidance.”

Despite of the time of liftoff is still mystery, but it makes more dollar around the world comeback to US, which make dollar exchange rate is more powerful and other currency fall down. Indonesian Rupiah (IDR) fall until around Rp 13.000,- in these few days, which cause some of the economist afraid that IDR exchange will be as weak as in the economic crisis in 1998.

Commisioner Deputy of Banking Super Vision of Financial Service Authority (OJK), Mulya Siregar said that the economy situation today is different with the crisis in 1998. “Even Euro exchange is weakened until 11%. In 1998 (the low exchange rate) because of our internal problem and politic economy. But now, this is not under our control,” he said.

Analyst from NH Korindo Securities Indonesia, Reza Priyambada, said that the uncertainty of The FED can make IDR move slightly higher. This is because of the Bank of Indonesia (BI) is still maintain its BI rate. “In line with our expectations at the level of 7.5 percent.”

*) The Author is Brunei Darussalam’s Contributor.

 

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