At the end of 2021, the Rupiah has limited movement versus the US Dollar. One of the reasons is Omicron's concern that it's starting to come back.
After strengthening quite significantly in the last few days, the rupiah is now weakening versus the US dollar. When the news was released on Tuesday (28/December), USD/IDR was trading around 14,239.5. Given that there is no longer any release of economic data that could have a significant impact, the rupiah is predicted to move within a limited range.
Bank Permata's Chief Economist, Josua Pardede, said that one of the main reasons for the weakening of the rupiah was the return of market players' concerns about the development of the Omicron virus globally. In several countries, the number of sufferers of the new variant of COVID-19 is indeed increasing rapidly.
"In China and Australia, the number of people affected by the Omicron virus has actually increased many times. This has triggered a risk off," said Pardede.
Europe is still the main concern for the spread of this new variant. France is included in the list of countries that have 100,000 cases of COVID-19 per day, as well as the UK and the United States. White House infectious disease experts even predict that the increase will continue.
In Indonesia itself, the first Omicron case was detected on December 16 and has continued to increase since then. As of today, it is known that there are 46 cases of COVID Omicron in the country.
However, some analysts are still optimistic about the Rupiah exchange rate going forward. Lukman Leong, DC Futures analyst, predicts that the Rupiah will still be able to strengthen again. According to him, the rupiah is now weakening due to the declining volume of transactions ahead of the New Year's holiday. Although the transmission of Omicron is starting to rise, Lukman is sure that it will not cause serious health impacts.
Dubravko Lakos-Bujas from JPMorgan agrees. He believes that the increase in cases will not cause an economic slowdown. "We don't believe Omicron will significantly affect the outlook for economic growth, in fact it is likely to accelerate the end of the pandemic," he said as quoted by CNBC International.
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