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Indonesia's Ranking Improves, Rupiah Holds Steady At 9,000

The depreciation of the euro below the psychological level of US$ 1.3 has strengthened the United States dollar against major world currencies. Consequently, the rupiah and other Asian currencies have also experienced pressure throughout the past week. 

Concerns regarding strict fiscal austerity measures in the European Union may slow down the region's economy, coupled with threats from international rating agencies to downgrade European countries' ratings, have caused the euro to decline to a level of US$ 1.29. 

Last week, the exchange rate of the rupiah weakened to 9,200 per US dollar due to strong negative sentiment in the market. However, the efforts of Bank Indonesia (BI) to stabilize its currency prevented the rupiah from fluctuating excessively, allowing it to strengthen by the end of the weekend. 

Positive news regarding Indonesia's upgrade to investment grade after Fitch Ratings raised Indonesia's rating by one notch to BBB, with a stable outlook, has enabled the rupiah to approach the level of 9,000 per US dollar once again. 

Abidan Saragih, a currency market analyst from PT Pacific Duaribu Futures, explained that Indonesia's investment grade rating provides a breath of fresh air for market participants. Amidst the downgrading of European countries, Indonesia's rating has improved, restoring investor confidence in holding the local currency. 

The trend of a weakening euro and falling gold prices will continue to drive demand for the US dollar among market participants, which will maintain pressure on the rupiah in the market. 

Abidan predicts that this week the rupiah will be traded within a wide range of 9,000-9,200 per US dollar. "Due to external factors, particularly the European debt crisis, the movement of the rupiah will still be influenced this week," he stated. 

Tag: Abidan Saragih Bank Indonesia Rupiah