The deteriorating sentiment of market participants since last Friday made the rupiah immediately slump against the US dollar as soon as Monday's trading opened. The new variant of the coronavirus B.1.1.529 or called Omicron has started to panic the global financial markets.
Launching data from Refinitiv, the rupiah opened trading by weakening 0.35% to Rp 14,350/US$. The weakening of the Indonesian monetary unit more wedged to 0.42% to Rp fourteen,360/US$ at 9:07 WIB, this level was the weakest since last day.
The Omicron coronavirus, that was 1st detected in African country, has currently been found in many countries, together with Indonesia's neighbor, Australia. Both came from South Africa and landed in Sydney.
It is feared that the emergence of Omicron will make many countries re-establish lockdowns which will eventually lead to an economic slowdown. Rupiah as a rising market currency is at an obstacle once sentiment worsens. Investors will choose the US dollar which has a haven status.
Risk Factors Causing Rupiah Weakening
Meanwhile, from inside the country, the Minister of Health, Budi Gunadi Sadikin explained that the govt had tightened all transportation routes for each air, sea, and land to stop the entry of the letter of the alphabet variant into Indonesia.
Looking at the risk factors, anyone who has a lot of flights to Indonesia, and we do this not only for airports but also for seaports and land borders because in our experience the delta variant enters from the sea, so we guard it there.
To prevent the Omicron variant which has now spread to several countries, the government also prohibits foreign nationals (WNA) from African countries and countries that have the potential to spread the Omicron virus.
Budi same the govt had learned a great deal throughout the pandemic and did not need to miss out once more, therefore all routes should be closely monitored. The rupiah weakened 0.46% against the United States (US) dollar to Rp 14,300/US$ over the past week.
The rupiah was under a lot of external pressure, starting from the possibility of an early increase in interest rates in the US due to high inflation and the emergence of a new variant of the coronavirus that was more dangerous than before.
It is evident that the rupiah only weakened slightly in the first 4 trading days. The rupiah was only under pressure on Friday, after news of the Coronavirus variant B.1.1.529 or called Omicron began to panic the financial market.
Omicron's Spread Is Expanding
The virus, which was first detected in South Africa, has now been found in several countries including Hong Kong. Scientists say Omicron is a lot of contagious than different variants and will cut back the effectiveness of the immunogen.
The World Health Organization (WHO) defines Omicron as a Variant of Concern (VoC). It is feared that the emergence of Omicron will make many countries re-establish a lockdown. As a result, the sentiment of market participants deteriorated, global stock markets plummeted.
Rupiah as associate in nursing rising market currency is at a drawback once sentiment worsens. Investors will choose the US dollar which has a haven status. If market sentiment continues to deteriorate, the rupiah is at risk of falling this week.
The pressure on the rupiah is also quite large as the Stochastic indicator on the daily chart moves up but has not yet reached the overbought area. Stochastic is a leading indicator or an indicator that initiates price movements.
When random reaches the overbought or oversold territory, the worth of AN instrument features a likelihood to reverse direction. When USD/IDR reaches overbought, it is likely to reverse down. This means that if it has not reached the overbought area, rupiah pressure is still quite large.
