Deserves the Mighty Rupiah, Lots of Happy Year End News

Deserves the Mighty Rupiah, Lots of Happy Year End News

The Rupiah was able to be mighty against the United States (US) dollar when many other countries' currencies slumped. This is inseparable from a series of happy news at the end of the year. "Positive data continued to arrive at the end of the year both globally and nationally," said Bank Mandiri chief economist Andry Asmoro. 

According to Refinitiv data, the rupiah immediately shot up 0.67% to IDR 15,550/US$ on the spot market. Towards noon, the rupiah had corrected 0.25% to Rp. 15,616/US $, but was still stronger than yesterday's position. Some of the happy news that came, among others, was slowing US inflation. The Consumer Price Index (CPI) as of November 2022 is at 7.1% on an annual basis (yoy). Down from the previous month at 7.7% year of year. 

This result also marked a decline in inflation for 5 consecutive months. Domestically, inflation is also expected to be lower than 6%, along with controlling food prices and the effects of rising fuel prices (BBM). "It is possible that this inflation data will be responded to by a less aggressive reference rate policy compared to previous months," explained Andry. 

Andry views the prospects for financial markets in developing countries, such as Indonesia, to be positive going forward. Despite being faced with an era of high interest rates in many countries. Moreover, Indonesia's economy is still able to grow positively when other countries are in a recession.

"If we look at Indonesia's experience in several periods of global crises, Indonesia's growth can still hold on top of other countries that have large exposure to international trade. So, Indonesia will still be able to become a hotspot in the middle of global growth deceleration," he concluded. 

The United States Department of Labor (US) last night released inflation figures as measured by the Consumer Price Index (CPI) as of November 2022, which was 7.1% on an annual basis (yoy). Sloping from the previous month to 7.7% yoy. This result also marked a decline in inflation for 5 consecutive months. 

The inflation rate is also below the consensus of Reuters and Trading Economics analysts, who predict the inflation rate will be at 7.3% on an annual basis. This data release further strengthens US inflation has reached its peak in May 2022 at 9.1%. 

This also made global sentiment more conducive, so that currencies in emerging markets could strengthen on the spot market. Meanwhile, global investors are still waiting for the FOMC announcement which is scheduled for Thursday this week. 

The Fed will announce its monetary policy direction. Referring to the CME Group, 83% of analysts predict that the Fed will raise the benchmark interest rate by 50 bps. Lower than the previous increase. 

Commonwealth Bank of Australia (CBA) Currency Strategist Carol Kong expects Fed Chair Jerome Powell to provide his views on the risks to economic growth going forward. "We expect FOMC Chair Powell at his press conference to speak about risks to economic growth as well as the need to bring inflation down to a target," he said.

In Asia, the majority of Asian currencies are still collapsing. Only three currencies have successfully strengthened, including the Malaysian ringgit, the Taiwan dollar and the Garuda currency. 

Meanwhile, the Indian rupee fell sharply by 0.39% against the US dollar. Then they were followed by the Chinese yuan, which weakened 0.23%.

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