The rupiah exchange rate is estimated to weaken against the United States (US) dollar. External factors will still overshadow the movement of the rupiah in Monday's trading. The rupiah exchange rate closed down 0.10% on Friday's trading at Rp 14,613 per US dollar.

The Jisdor Bank Indonesia (BI) reference rate weakened 0.23% to Rp 14,619 per US dollar. President Commissioner of HFX International Futures, Sutopo Widodo, said that during Monday's trading, the rupiah may still weaken.

To retest the April 2021 high price of IDR 14,645 per US dollar. A break to the upside of Rp 14,645 will put pressure on BI again to think about raising interest rates or other policy changes at the May 24 meeting.

The effects of the global political crisis have pushed up the overall price of goods, especially energy prices. In the meeting on April 19 last, BI still kept the interest rate at 3.5%.

Meanwhile, Bank Permata Chief Economist Josua Pardede said that next week, the rupiah still has the potential to weaken, although not as drastically as this week. The weakness was caused by the Fed's sentiment to a limited extent.

The Weakening of the Rupiah Still Due to the Fed

The weakening of the rupiah is still driven by the continued hawkish sentiment from the Fed. Sentiment from the Fed comes from the FOMC results. The Fed will signal a 50-bps rate hike at the next two FOMC meetings. This was strengthened and in line with rising US inflation.

Josua projects that the rupiah will be in the range of Rp 14,575 per US dollar - Rp 14,675 per US dollar in Monday's trading. Meanwhile, Sutopo projects that the rupiah will move in the range of Rp 14,550 per US dollar - to Rp 14,650 per US dollar.

The price of shares, Government Securities (SBN) to the rupiah exchange rate plummeted. The Composite Stock Price Index (JCI) closed at 7,228.91, right on the last trading day before the long holiday.

However, on Friday, the JCI ended below the psychological level of 6,600 or to be precise at 6,597.99. This week, the JCI has fallen 8.73% and has left a return of 0.25% since the beginning of the year, whereas previously it was almost 10%.

The JCI correction also coincided with foreign net sales which reached Rp 8.41 trillion in the regular market. Meanwhile, foreigners also netted Rp 697.4 billion in the negotiation and cash markets.

Rupiah Closing on the Weekend

In total, foreigners netted Rp 9.11 trillion in shares. Foreign selling also occurred in the SBN market. Bank Indonesia (BI) noted that non-residents in the Indonesian financial market sold net SBN worth Rp 12.32 trillion in the period 9-12 May 2022.

The 10-year SBN yield also closed at 7.39%. The yield on 10-year SBN rose more than 40 basis points (bps) considering that before the holiday, the yield on 10-year SBN was still below 7%. The increase in yields reflects a price correction in the SBN market.

Total outflows, which reached almost Rp. 20 trillion from the Indonesian financial market, also contributed to depressing the performance of the rupiah exchange rate this week.

If before the holiday the rupiah exchange rate was still below Rp. 14,400/US$, now the rupiah has fallen to near the level of Rp. 14,600/US$. This week, BI also released data on Indonesia's foreign exchange reserves for April 2022, which fell by US$ 3.4 billion to US$ 135.7 billion.

The decline was due to an increase in the need for foreign exchange in line with increasing economic activity and the need to pay off the government's external debt.

For next week several sentiments should be observed by investors. Financial markets have fallen significantly this week. There is hope that next week the market will rebound.