USD\/IDR depreciates after registering over 0.5% gains in the previous day, trading around 18,020 during the Asian hours on Friday. However, the pair may see upward momentum following Bank Indonesia’s (BI) unexpected decision to hold its benchmark interest rate steady at 5.75% in July. Rather than opting for further rate hikes to support the currency, the central bank has chosen to focus on targeted currency stabilization measures.<\/p>\n
Meanwhile, proposed defense spending cuts are intended to reinforce Indonesia\u2019s broader fiscal health. However, these gains may be offset by rising global oil prices, which continue to put a ceiling on the rupiah’s potential upside by driving up inflationary pressures.<\/p>\n
The USD\/IDR pair holds losses as the US Dollar (USD) struggles despite rising safe-haven demand due to escalating conflicts in the Middle East. US-Iran conflict pushes crude oil prices higher. An oil-driven inflation spike has fueled expectations that the US Federal Reserve<\/a> (Fed) might resume raising interest rates<\/a>.<\/p>\n According to the CME FedWatch tool, money markets are currently pricing in roughly a 35.8% chance of a Fed rate hike this month, alongside an 82.1% probability of at least a quarter-point hike in September.<\/p>\n Risk sentiment FAQs<\/p>\n In the world of financial jargon the two widely used terms \u201crisk-on\u201d and \u201crisk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a \u201crisk-on\u201d market, investors are optimistic about the future and more willing to buy risky assets. In a \u201crisk-off\u201d market investors start to \u2018play it safe\u2019 because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.<\/p>\n Typically, during periods of \u201crisk-on\u201d, stock markets will rise, most commodities \u2013 except Gold \u2013 will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a \u201crisk-off\u201d market, Bonds go up \u2013 especially major government Bonds \u2013 Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit. <\/p>\n The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are \u201crisk-on\u201d. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.<\/p>\n The major currencies that tend to rise during periods of \u201crisk-off\u201d are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world\u2019s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them \u2013 even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.<\/p>\n","protected":false},"excerpt":{"rendered":"USD\/IDR depreciates after registering over 0.5% gains in the previous day, trading around 18,020 during the Asian hours…\n","protected":false},"author":2,"featured_media":820445,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-820444","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/820444","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=820444"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/820444\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/820445"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=820444"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=820444"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=820444"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}