Will DHE Policy on Manufacturing Sector Affect Rupiah?

Summary

The rupiah has become increasingly stronger against the US dollar since the beginning of this year. This week, it broke the psychological level below Rp 15,000 per dollar. Several factors contributed to the strengthening of the rupiah. The Indonesian government's plan to implement the export proceeds obligation (DHE) in the manufacturing sector is crucial. Other supporting factors are US' monetary policy which stops raising interest rates, and China's expected economic recovery increasing foreign funds inflows into the government securities (SBN) market.

Refinitiv data on Monday showed that the rupiah was up 0.43 percent to Rp 15.075 per United States (US) dollar at the opening of trading on the spot market. Rupiah even managed to hit Rp 14,980 per US dollar, the highest since Sept 2020, but at the end of the day, the exchange rate was only up 0.69 percent to Rp 15.045 per US dollar. Meanwhile, the rupiah at the Jakarta Interbank Spot Dollar Rate was at Rp 15,019 per US dollar, or up 1.04 percent in a day.

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