The United States (US) dollar is currently strong, while the domestic market is waiting for the announcement of the monetary policy of Bank Indonesia (BI). As a result, the rupiah weakened another 0.14% against the US dollar to Rp 14,240/US$ yesterday.

The weakening of the rupiah is small if you look at the US dollar index, which two days ago shot 0.52% and then yesterday it rose again to 0.34% to 96.241, which is the highest level since July 2020.

However, at the end of Wednesday's trading, the index that measures the strength of the US dollar experienced a 0.14% correction, which could provide an opportunity for the rupiah to strengthen in early trading on Thursday.

In addition, the announcement of BI's monetary policy will affect the movement of the rupiah and could be quite significant.

Market participants will see how Governor Perry Warjiyo and colleagues respond to the tapering by the US central bank (The Fed) and the possibility of aggressively raising interest rates next year.

Forecast on Garuda Currency Movement

The results of a Reuters poll showed atomic number 83 is predicted to carry interest rates till the tip of next year and still listen to the direction of the Fed's financial policy.

The market agreement compiled by CNBC Indonesia conjointly estimates that the metal seven Day Reverse Repo Rate can stay at 3.5%.

James Sweeney, chief social scientist at Credit European nation aforesaid bismuth can raise interest rates next year to stop capital outflows and maintain Indonesian monetary unit stability.

When the Fed begins to reduce its accommodative monetary policy and begins tapering in the fourth quarter of 2021, we see that Bank Indonesia will protect the rupiah exchange rate from the possibility of capital outflows by raising interest rates next year.

If BI confirms its projection of an increase in interest rates next year in the announcement of the monetary policy meeting this time, the rupiah can strengthen and could continue until Friday tomorrow.

Technically, the pressure on the rupiah is getting bigger after yesterday's weakening and ending trading above the Hammer pattern formed on Monday and is now above the 50-day moving average at around Rp 14,220/US$.

This level may well be the key to the movement of the Indonesian monetary unit nowadays. In addition, the Stochastic indicator on the daily chart is moving down and is getting closer to the oversold area.

Rupiah Strengthens Against Dollar

Stochastic may be an index or AN indicator that initiates value movements. When random reaches the overbought (above 80) or oversold (below 20) territory, the worth of associate instrument will reverse direction.

When USD/IDR reaches oversold, it is likely to reverse up, meaning that the risk of rupiah weakening is even greater. Meanwhile, if it goes back below the 50-rupiah MA, it can strengthen to Rp. 14,200/US$ to Rp. 14,180/US$.

The rupiah exchange rate strengthened against the United States (US) dollar on Thursday ahead of the announcement of Bank Indonesia's monetary policy. The US dollar index, which experienced a correction on Wednesday's trading, pushed the rupiah into the green zone this morning.

Launching Refinitiv data, the rupiah opened trading by strengthening 0.07% to Rp 14,230/US$. The rupiah's appreciation then increased by 0.14% to Rp 14,220/US$ at 9:07 WIB.

The US dollar index yesterday rose again to 0.34% to 96.241, which is the highest level since July 2020. However, at the end of trading Wednesday, the index that measures the strength of the US dollar experienced a 0.14% correction.

The jargon ahead of the curve referred to by Perry refers to the hawkish attitude he implemented in response to the normalization of the benchmark interest rate by the US central bank (The Fed). At that time Perry was very aggressive in raising interest rates.