Indonesian Rupiah has been strengthening against dollar since there have been global issues happening recently. There are external factors that are influencing this, from the concern about US economy and currency to a decline in the global oil prices. This kind of macroeconomic event is important for traders that are learning forex. Here are some of the external factors that have driven Rupiah to strengthen.

Sentiment of the US Economic

There are still negative sentiments in the US economic such as the partial government shutdown and the vagueness of the negotiation process between US and China concerning the trading wars. This has made US Dollars continue to be overshadowed by the trend of weakening currency. These issues have made consumers believe that economic growth is getting a negative impact.

The US-China trade has triggered Rupiah to strengthen significantly. Quoted from CNBC, US President Donald Trump said that he would consider delaying the trade agreement deadline that has been originally scheduled for the 1st of March, 2019. He also said that he actually really wants to reach agreement with Beijing, so he prefers not to rush on implementing the agreement.

When President Trump was asked if he had plans to meet with President Xi Jinping at the end of March, he said he wasn’t planning of that in the near future. This indicates that both parties still need a lot of preparation beforehand. The drop of world oil prices has also become another sentiment that moved Indonesian Rupiah to a higher currency.

Market’s pessimism towards the US Dollar Index 

Ahmad Mikail, Indonesian Securities Analyst, has projected that US Dollar Index (DXY) would continue to weaken against other major currencies. This is proved as the decline in the US Dollar against Japanese Yen has happened. The strengthening of Japanese Yen was believed to be able to support the movement of Indonesian Rupiah.

Ariston Tjendra, Monex Investindo Futures’ Head Researcher has said that the weakening US Dollar is due to the Fed’s policy to delay the increase of interest rate. The success of President Trump to negotiate trade with China has also improved the relationship between US-China. This is hoped to bring a positive result to global economy, including Indonesian Rupiah.

Rupiah is shadowed by negative sentiments

Despite the strengthening of Indonesian Rupiah, it is still shadowed by negative sentiments. If we look at the internal sector of Indonesia, the Current Account Deficit (CAD) which has been spreading has made the position of Indonesian Rupiah still considered not safe. This widening of the CAD could potentially affect the Indonesian Rupiah. 

In addition to that, the decline of the foreign exchange reserves, the business confidence index, as well as the index of consumer confidence, could also drive the negative sentiment towards Indonesian Rupiah exchange rate. If the foreign exchange reserve doesn’t match expectation, this increase of negative sentiment towards the Indonesian Rupiah may still happen.

Conclusion

It is still believed that there are still chances that Indonesian Rupiah will strengthen. If you are currently learning forex, you can now understand how what happens in the global economic has a great effect on how the currency moves. Following this kind of news is important for a trader so you can adjust your strategy based on the global news.

This method of analysis is called fundamental analysis. To learn more about this, you can go to websites such as Didimax that provides recent news of the global forex market. This reputable broker also provides online as well as offline classes that you can enroll for free. They also have mentors if you would like an extensive forex learning journey!