Rupiah Declines Again on Tuesday Closing at Rp11,601

Jakarta (Antara) - The Indonesian currency, the rupiah, declined again on Tuesday against the US dollar due to an absence of positive sentiment. The rupiah closed weaker by 46 points to Rp11,601 against the greenback, from Rp11,555 the day before. "The depreciation of the rupiah today was connected with the Indonesian trade balance, which continues to suffer from a deficit. The Indonesian trade balance is expected to record a deficit until the end of the year," Bank Mandiri's money market analyst Renny Eka Putri said. She added, however, that further pressure on the rupiah was expected following Bank Indonesia's decision to raise the BI Rate by 25 basis points to 7.5 percent. "The impact of the BI Rate hike on the rupiah has not yet been felt, but in the future it could provide positive sentiment to the domestic exchange rate," she said. Renny added that the hike was BI's anticipatory measure against inflation ahead of the Christmas and New Year celebrations. "Inflation is expected to rise due to the Christmas and New Year celebrations, causing food prices to rise. BI has already seen signs of inflation and, therefore, has decided to raise the rate," she said. She projected the rupiah exchange rate would appreciate again on Wednesday to between Rp11,300 and Rp11,430 against the US dollar. Meanwhile, Bank Indonesia's middle rate on Tuesday was recorded as weakening to Rp11,576 from Rp11,486 the day before per US dollar. (*)