REPUBLIKA.CO.ID, JAKARTA -- The exchange rate of the Indonesian currency strengthened by 32 points to Rp13,323 against the U.S. dollar on Friday, following Standard & Poor's move to raise the country's status to investment grade.
"The sentiment from Standard & Poor's (S&P) decision to raise the Indonesian rating to an investment grade has reversed the rupiah movement to a positive direction," Bank Woori Saudara Indonesia's money market observer, Rully Nova, said.
He said the hike in the country's rating would bolster foreign investors' desire to invest in the country.
It would also show that the risk for invest in the country would also be lower, he added.
"Domestic investment will be more attractive and secure," he said.
He further said the government's policies that have been produced so far seemed to have been fruitful. Maintaining fiscal management and intensive infrastructure development are believed to be one of the factors behind the positive rating from S&P.
Increasing world prices of crude oil have also been a factor in boosting the rupiah.
The WTI crude price rose 1.05 percent to US$49.87 per barrel, while Brent crude was up 1.10 percent at US$53.09 per barrel.
PT Platon Niaga Berjangka analyst Lukman Leong said S&P's decision had exposed that national economic fundamentals have been maintained well despite domestic political upheavals.
"S&P's decision for rupiah fluctuation being maintained in the long term is not vulnerable to corrections," he said.
Bank Indonesia's middle rate on Friday weakened rose to Rp13,410 from Rp14,343 on Thursday against the U.S. dollar.
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