Jakarta - Bank Indonesia described the sharp rupiah depreciation crossing the level of 13,600 per US dollar on Thursday as normal dynamism.
The fall, the sharpest so far this year was caused by market players adjusting to expected increase next month of the benchmark interest rate of The Federal Reserve, Senior Deputy Governor of the Indonesian Central Bank Mirza Adityaswara said.
"That was only a normal adjustment. The rise in the Fund Rate is expected in March but the pressure is felt in February," Mirza said here on Thursday.
On Thursday morning, the rupiah value dropped to 13,602 per dollar or a 0.51 point loss in value from 13,533 on Wednesday morning.
In mid day on Thursday the rupiah lost more value to the level of 13,608 per dollar.
Mirza said the market players changed their expectation of the Fund Rate of the US Central Bank from an increase of 2-3 times to 3-4 times this year on improvement of the US economic data, especially improvement in labor data , followed by increase in inflation expectation and yields of the US state bonds.
"We see the market expectation of the US economy is strong, therefore, there was adjustment, which we think it is only normal," he said.
The rupiah lost 37 points in the opening trade to the level of 13,580 per dollar from 13,543 earlier.
Economist of the Samuel Sekuritas Ahmad Mikail said the US dollar gained on an increase in the yield of the U.S. government bonds after the approval of the deficit budget of that worlds largest economy.
"The rise in the bond yield put a brake on the rupiah appreciation despite positive domestic sentiment," Ahmad Mikail said.
He said positive sentiment with the increase in the countrys foreign exchange reserve in January, 2018 is expected to be effective in reducing the pressure on the domestic currency.
Source: ANTARA News