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The rupiah opened slightly lower against the US dollar in Monday’s trading. ANTARA reported that the rupiah fell 2 points, or 0.01 percent, to Rp18,149 per US dollar from its previous close of Rp18,147 per US dollar. Investors are focusing on several domestic economic data releases scheduled for the same day.
Limited movement at the opening
The opening movement extended the decline recorded at the end of the previous week. Citing Bloomberg data reported by KONTAN, the rupiah closed down 0.06 percent on Friday, October 30, at Rp18,147 per US dollar in the spot market. Over the week, the spot rupiah weakened by 0.37 percent.
Doo Financial Futures Chief Analyst Lukman Leong expects the rupiah to remain largely flat. In a statement to ANTARA, he said investors were awaiting a series of domestic economic data releases, including inflation and trade figures, before determining the currency’s next direction. Under these conditions, the exchange rate is not expected to move far from its previous closing level at the start of the week.
Inflation and trade in focus
According to Lukman’s forecast, inflation could edge up from 3.28 percent to 3.3 percent. Meanwhile, the trade balance is expected to continue recording a surplus of US$1.9 billion. These figures are analysts’ estimates, not officially announced results.
Inflation and trade balance data may help market participants assess domestic economic conditions. Investors therefore tend to wait for the data releases before taking larger positions in financial markets. This cautious stance is also expected to keep the rupiah’s movement limited in Monday’s trading.
Pressure from foreign fund outflows
In addition to the wait for economic data, pressure on the rupiah is believed to be coming from domestic sentiment. KONTAN reported Lukman’s view that risk aversion has been accompanied by continued net selling by foreign investors in the domestic stock market.
Lukman told ANTARA that foreign investors recorded net sales of Rp3 trillion across the market during the previous week. This was seen as keeping overall domestic sentiment weak. At the same time, Asian currencies were also reported to have opened lower, leaving the rupiah with little support from regional movements.
Oil prices and the rupiah’s projected range
External sentiment also came from a decline in global oil prices amid hopes for negotiations to end the war between the United States and Iran. However, the prospect of negotiations remains subject to certain conditions. ANTARA, citing Sputnik, reported that Secretary of Iran’s Supreme National Security Council Mohsen Rezaei said on Saturday, October 31, that negotiations would take place only if Washington accepted seven conditions proposed by Tehran.
Taking into account domestic data, foreign fund flows, movements in Asian currencies, and oil price sentiment, Lukman expects the rupiah to trade within a range of Rp18,100 to Rp18,200 per US dollar. The range is an analyst’s projection and remains dependent on the market’s response to economic developments throughout the trading session.
