Go Finance Reporting Jakarta - The rupiah again solidified its position below the level of Rp9.000 per USD. Bank Indonesia (BI) has seemed deliberately release rate so that the current strengthening of BI BI is on the level of Rp8.947 per USD.
Amount, according to the exchange rate of Bank Indonesia (BI) on Monday (02/07/2011) rose to Rp8.975 per USD compared with the end of trading last week that parking at Rp9.030 per USD. Meanwhile, according yahoofinance, the rupiah strengthened to Rp8.947, 5 per USD with a daily trading range from 0.5 to 8 .995 Rp8.947 per USD.
U.S. dollar exchange rate also appears to be moving down for other currencies. The euro rose to 1.3618 per USD, as well as pounds rose to 1.6172 per U.S. dollar. While the yen weakened to 82.3 per USD.
Samuel Securities analyst said Bank Indonesia eventually raise its benchmark interest rate 25 bps, to 6.75 percent on 4 February. This increase is an effort to dampen inflation expectations continue to strengthen.
Although inflation is driven more by rising food prices but most food is imported materials such as soy, wheat, sugar. Imported components in the portion of the CPI is high enough to reach around 30 percent.
To reduce the effects of imported inflation, exchange rate need to be strengthened (exchange rate pass through effect). The strengthening of the rupiah will help reduce production costs based on imports, thus reducing price pressures in the domestic production. BI rate increase positive response by the market, with increasingly rapid flow of foreign capital into the Indonesian market.
(GoFinance)
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