The Indonesian rupiah, once Asia’s strongest currency earlier this year, has started to lose momentum. amid outflows from the bond market and a narrowing current account surplus. Analysts keep an eye on ‘Baht-Won’ as the strongest currency this year thanks to the virtue of China’s opening up of the country.
at the beginning of the year The Indonesian rupiah is Asia’s strongest currency, however, some analysts estimate that This round of rupiah appreciation may not last long. As drag factors for the weakening of the rupiah are building. whether it is expected that the US Federal Reserve (Fed) will keep interest rates at a high level for longer; and a decrease in the current account surplus of Indonesia.
Alvin Tan, head of Asian foreign exchange strategy at RBC Capital Markets in Singapore, said: “Continued rising global bond yields are likely to exacerbate cross-asset volatility. continue to be high which is not good for the rupiah.”
The rupiah is under pressure as the US dollar strengthens. And money flowed out of the Indonesian bond market monthly for the first time since October. After earlier, the price of Indonesian bonds rose. This is due to bets that the Fed will change policy within the year. This led investors to bet on the uptrend in emerging market assets.
in the past few days The rupiah has lost momentum and weakened about 1.5% in February. After January, the rupiah was the strongest in almost three years on a month-on-month basis. amid a record high current account surplus and money flowing into the bond market
with the recent outflow from the bond market. This is affecting the rupiah. This is because foreign funds sold nearly $400 million of Indonesian government bonds in February. After spending $3.3 billion the previous month
In addition, Barclays Plc, a major financial institution from England. also predicted Indonesia’s current account surplus will swing into negative territory or deficit by 0.2% of GDP this year and 0.8% next year.
Another factor dragging the rupiah is Bank Indonesia’s benchmark interest rate is kept unchanged this month. as inflationary pressures eased Causing investors to wait and see the core inflation figure to assess whether Will this cycle of tight control by the Central Bank of Indonesia end?
If the Indonesian Rupiah continues to lose momentum. The Thai baht and South Korean won also tend to be the strongest currencies in Asia. Due to the consequences of China’s reopening according to Alvin Tan
According to Bloomberg data, today (February 27), the year-to-date (YTD) Indonesian currency has weakened by 1.95% against the baht, which appreciated about 1.55% and the won, which appreciated about 5%.