The rupiah is strengthening...
July 27th, 2020
⏰ 1 minute read
⏰ 1 minute read
The rupiah trend is for strength, the dollar has reversed, & net Corona is suddenly zero...
Surprise
Surely one of the great surprises of the last few months is the strength of the rupiah. Many have expected it to weaken but it hasn’t. Just a few days ago, it looked like it might break back above 15,000 & now a few days later it’s back at 14,500 & change. Here’s 3 reason why the rupiah is strengthening.
Technically
The first reason is technically. 2 years ago the rupiah was 14,500, a year ago it was a little stronger than 14,500, now it’s at 14,500. After a decade of decline the rupiah has stabilized & was strengthening until it got hit by Corona Virus panic selling. But the longer term average is strengthening & that trend can now resume.
Dollar
The second reason for rupiah strength is the weakness of the US dollar. During the Corona crisis the US dollar index tried to break above 100, its highest level since 2016. But it has now spectacularly reversed & is at 93.7 today. That’s the weakest since 2018 & a sign that a very strong economic recover is coming very fast.
Corona
The third reason is the virus itself. It may not feel like it quite yet, but we are recovering very quickly. The number of new cases in Indonesia is still quite high, but it’s seems to be rolling over. The net, new cases minus recoveries was at its highest, over 1,000, two weeks ago, now suddenly it’s dropped to zero.
Quick
The speed that this is all happening is amazing. Normally a crisis might take years to turn around while this one is happening in months & even just weeks. If you’re waiting on the sidelines to see if things go back down again, you might want to reconsider. The currencies are moving ahead of equity markets & pointing sharply upwards.
Surely one of the great surprises of the last few months is the strength of the rupiah. Many have expected it to weaken but it hasn’t. Just a few days ago, it looked like it might break back above 15,000 & now a few days later it’s back at 14,500 & change. Here’s 3 reason why the rupiah is strengthening.
Technically
The first reason is technically. 2 years ago the rupiah was 14,500, a year ago it was a little stronger than 14,500, now it’s at 14,500. After a decade of decline the rupiah has stabilized & was strengthening until it got hit by Corona Virus panic selling. But the longer term average is strengthening & that trend can now resume.
Dollar
The second reason for rupiah strength is the weakness of the US dollar. During the Corona crisis the US dollar index tried to break above 100, its highest level since 2016. But it has now spectacularly reversed & is at 93.7 today. That’s the weakest since 2018 & a sign that a very strong economic recover is coming very fast.
Corona
The third reason is the virus itself. It may not feel like it quite yet, but we are recovering very quickly. The number of new cases in Indonesia is still quite high, but it’s seems to be rolling over. The net, new cases minus recoveries was at its highest, over 1,000, two weeks ago, now suddenly it’s dropped to zero.
Quick
The speed that this is all happening is amazing. Normally a crisis might take years to turn around while this one is happening in months & even just weeks. If you’re waiting on the sidelines to see if things go back down again, you might want to reconsider. The currencies are moving ahead of equity markets & pointing sharply upwards.
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