The Rupiah is estimated to have consolidated with limited strengthening tendencies. This is evidenced by the strengthening of the rupiah exchange rate transacted between banks in Jakarta on Wednesday morning. 

This follows the high demand for Indonesian government bonds. This morning, the Rupiah increased by around 0.28 per cent to Rp 14,930 per US dollar. 

Rupiah sentiment is still positive and is reflected in demand for Indonesian government bonds, bringing the 10-year bond yield to its lowest level since March 2022. 

The high demand for Indonesian government bonds was influenced by positive investor sentiment regarding Indonesia's relatively solid economic growth amidst the global slowdown and recession. 

The Indonesian government is also reported revising Government Regulation (PP) Number 1 of 2019 concerning Natural Resource Management, which is considered one of the ways to encourage the growth of exports and foreign exchange reserves.

Today's Rupiah Exchange Rate Has Strengthened by 0.28%, A Pretty Good Start

Bank Indonesia noted that there was a net inflow of foreign capital which reached nearly 15 trillion Rupiah. This is the latest data released and will have a positive impact on the movement of the Rupiah.

Especially when compared to the previous position, this is a good start. The US dollar index that tracks the greenback against major currencies notes that the Rupiah has strengthened 0.28 per cent against the US dollar and is now in a position of Rp. 14,930.

Rupiah transactions are also relatively high, but the exchange rate is unstable compared to other currencies. So far this year, the Rupiah has also appreciated by 4.5%. 

This makes sentiment come from globally regarding strengthening the Rupiah, which is expected to save the Indonesian economy. Especially from the threat of recession, this is one thing that supports the expansion of the Rupiah.

This year's strengthening of 4.5 per cent has also made Indonesia one of the top 5 world's best currencies. Indonesia lost to the Russian Ruble, Colombian Peso, and Thai Baht. The correction in the value of the Rupiah triggers global forex trading towards this currency.

Apart from that, many have also noted that the factor driving economic growth in Indonesia is that the Rupiah had crossed the value of Rp. 15,000. This is the turning point for this currency, so the movement of the Rupiah can support investors and the local economy.

Bank Indonesia's Bold Step To Bring Strengthening Rupiah Value

Previously it was stated that the Government of Indonesia would revise the Government Regulation (PP) as a step for export growth and foreign exchange reserves. This is also considered a way to increase Indonesia's national foreign exchange reserves.

But other steps will be taken by Indonesia because, so far, foreign exchange is only one of its focuses. Meanwhile, Bank Indonesia has other plans to bring the Rupiah to a more substantial level, namely by expanding the use of local currency in exports.

The expansion of cooperation in using local currency, also known as the Local Currency Transaction, is considered to positively impact the Rupiah exchange rate. The head of economics at Bank Central BCA also said that they would do this for the Rupiah.

It was also stated that Bank Indonesia was conducting an LCT process with two countries, South Korea and India. Meanwhile, Indonesia has carried LCT with countries such as Malaysia, Thailand, Japan and China. 

Economists also positively welcomed this policy. This is a step to reduce dependence on the US dollar because there is still much uncertainty about the rupiah exchange rate this year. 

This is because the US Central Bank is also still being determined. The increase in US interest rates creates a new threat to the Rupiah in international trade.

Rupiah has had a reasonably positive movement recently. This was also caused by the action of Bank Indonesia in providing new policies. Including the LCT step is a way to reduce dependence on the dollar in global trade.