JAKARTA – Following the decision by Bank Indonesia's Board of Governors to maintain the BI rate at 6.00% yesterday (20/11), the Rupiah has slumped against the US Dollar, dropping to Rp15,945 as of 10.30 AM WIB today (21/11).

In just two months, the Rupiah has depreciated by 5.3%, or more than 500 basis points, from Rp15,145 on Sept 20, 2024, to today's level of Rp15,945.

This decline is attributed to the market's reaction to Donald Trump and the Republican Party's signals of victory in the US presidential election throughout October, as well as his confirmed position as the 47th President of the United States two weeks ago.

Trump’s policies are seen as favoring domestic economic (inward-looking policies), which, in turn, is expected to drive an expansion in the financing of the fiscal deficit.

"The increased need for fiscal deficit financing has pushed up US Treasury yields for both short- and long-term tenors," Bank Indonesia explained in a press release yesterday (20/11).

As a result, global investors are projected to reallocate their portfolios back to the US, leading to capital outflows from emerging markets, including Indonesia.

In addition to the Rupiah, the US Dollar has also strengthened against the Vietnamese Dong, Chinese Yuan, and Malaysian Ringgit over the past month. (ZH)