Jakarta (Antara Bali) - Indonesia's rupiah exchange rate strengthened by 40 basis points during interbank trade on Thursday morning to reach Rp12,436 from its previous value of Rp12,476 against the US dollar.
"The rupiah strengthened along with other currencies in Asia, following expectations from the European Central Bank's (ECB's) proposal known as quantitative easing (QE) to buy government debt," Rangga Cipta, an economist from PT Samuel Sekuritas Indonesia, stated here on Thursday.
He noted that the QE was anticipated by global investors. The ECB's decision will be taken positively by the investors and is expected to maintain the upward trend in rupiah-denominated assets.
"The rupiah still has a chance to strengthen. However, the reversal should be watched in case the ECB's decision disappoints the investors' high expectations," Cipta pointed out.
According to him, today (January 22), the ECB will announce its aggressive stimulus actions to boost the economy of Europe.
Money market observer from Bank Himpunan Saudara Rully Nova stated that the Bank of Japan (BOJ) plans to increase fiscal stimulus in order to achieve the 2 percent inflation target, thereby creating a positive sentiment for the Japanese yen against the US dollar and leading to a positive impact on the rupiah.
Moreover, after the US dollar strengthened in the recent days, the flows of profit-taking activity are promoting the rate of the rupiah, said Nova.
He remarked that strengthening of the rupiah is projected as a short-term event as there is still a deficit in the national trade balance and current account.
"The rupiah is still influenced by the performance of the trade balance and current account," he reiterated. (WDY)
