DXY Slips Below Psychological Level, Rupiah Pressured by Domestic Factors

Structural Factors Behind DXY's Decline

The US Dollar Index (DXY) has continued its weakening trend since the beginning of the year, with a monthly decline of 1.46% and a year-to-date decline of 9.70% to 97.961, according to Trading Economics. Economist Wijayanto Samirin from Universitas Paramadina attributes this decline to structural factors. Firstly, the increasing US debt has made the fiscal condition more vulnerable and increased fiscal risk. Secondly, the trend of countries shifting away from the US dollar to other hard currencies and gold as reserve currencies has also contributed to the decline. Lastly, the movement of many countries to use local currencies for transactions instead of the US dollar will reduce the demand for the US dollar.

Implications for the Rupiah

Despite the decline of the DXY, the rupiah is still under pressure from domestic factors. The rupiah's strength is not solely dependent on the DXY's performance but is also influenced by domestic economic conditions. Therefore, the decline of the DXY does not necessarily translate to a strengthening of the rupiah.

Conclusion

In conclusion, the decline of the DXY is a result of structural factors and is expected to be a long-term trend. The implications for the rupiah are complex and depend on various domestic and international factors. As the global economic landscape continues to evolve, it is essential to monitor the developments in the foreign exchange market and their impact on the Indonesian economy.