JAKARTA, NETRALNEWS.COM - Rupiah exchange rate at the interbank level in Jakarta is closed lower on Wednesday as the markets are still under the sentiments of the US-China trade war. Indonesia's currency is closed weakening by four points or 0.03 percent to IDR 14,259 per US dollar, from the previous position of IDR 14,255 per dollar.
"It could be that in the near future the trade war between the two countries will be escalated again and cause the economic pace of the two countries, along with the world, to experience a hard landing," said President Director of Garuda Berjangka Ibrahim Assuaibi in Jakarta, on Wednesday (28/08/2019).
China has disputed Trump's claim by emphasizing that the conversation over the telephone line that Trump was proud of had never happened. The Chinese government has expressed its disappointment with the US decision to re-impose higher import duties on the importation of products from its home country. According to Beijing, the US move was not constructive at all.
Meanwhile, according to Ibrahim, the escalation of the trade war could bring the US economy to the brink of recession.
"Speaking of recession, we have entered into the third sentiment that must be observed by market players. In recent times, the yield of US two-year tenor bonds has several times moved beyond the yield of US 10-year tenor," he said, as reported by Antara.
This phenomenon is referred to as inversion. Inversion is a phenomenon where the yield of short tenor bonds is higher than the long tenor.
Whereas under normal conditions, the long tenor yield will be higher because holding long tenor bonds is certainly more risky than short tenor.
In the morning, the rupiah was opened edging down to IDR 14,258 per dollar. Throughout the day, the rupiah moved in the range of IDR 14,255 to IDR 14,269 per dollar.
Meanwhile, Bank Indonesia's middle rate on Wednesday showed that the rupiah decreased to IDR 14,263 per dollar from IDR 14,235 per dollar the previous day.