US Dollar chased its highest level on Rupiah

In this world,majority each country has its own currency,one of those is US$. US$ is the U.S.A.currency.As a currency the dollar has a vital role.The Dollar is mainly used as form of payment either in USA or in International Trade.

In currency exchange or foreign exchange,a currency might experience either appreciation or depreciation.Appreciation is an increase in the value of a currency as measured by the amount of foreign currency it can buy.And Deppreciation is contra of appreciation or a deacrease in value of a currency.Both appreciation and depreciation of a currency are determined basically by the demand-supply law.Example , i choose two currencies comprise of USD and IDR.When i am willing to buy a goods,example a telescope in US i have to pay by USD but i live in Indonesia and i dont have a USD so i will exchange my currencies (IDR) into USD.As i exchange my IDR into USD of course the demand of USD increase and as that happen USD become appreciated and IDR become deppreciated.

As we’ve read  a news recently on a magazine,newsletter,tabloid,and websites,dollar appreciated toward  IDR by the highest level on Rp14.200 per one dollar.the increase was so strikingly high.Why this happens??is there any causality of this bad phenomenon??The Answer is absolutely available.
US Increase its interest rate,America have just raised its  interest rate to become 0.25-0.5% from 0-0.25%.This means when someone borrow some money in or from US the interest that accrued become higher.This regulation is basically to regulate the money flow in America and this regulation could be translated as America is still prudent on their economy so it prohibit the access of having a borrow from bank by raising interest rate. Not only does Interest rate work for borrower but also for lender.The lender will gain more interest by  investing on US obligation because the US have raised its interest rate.From this lucrative effort investors primarily foreign investors are getting more and more interrested in US Obligation  or Bonds.When they eager to buy it they have to exchange their currencies into USD so the demand of dollar increase more and more.
Dividen Shares Season, in Indonesia dividen usually shared by many corporation in march-may.  the amount of dividen which  The Investors gain is determined by percentage of their shares.the more percentage they have the more dividen they gain,but remember not every company share dividend every year.It is decided from General Meetings of Sharesholders.Mostly of Investors who planted their capital in Indonesia is Foreign Investor.thus,if they gain the dividen they will exchange their money which is rupiah into another currencies.as that happen  the demand of rupiah decrease, the rupiah become depreciated, in this case rupiah is becoming weaker toward US Dollar.
And then “What is the effect of the rise of US Dollar towards Rupiah?”

Rising price of imported good.Importing is an activity where domestic consumer buy foreign goods.otherwise,export is an activity where domestic goods is demanded by foreign buyers or customers.

As we import goods from outside of our country probably we pay with different currencies.It could be US Dollar,Japan Yen,Chineese Yuan,Euro,and another currencies.The payment is based on the contract,the concencus between trader and buyer.In this case most of Indonesia-imported goods use US Dollar as  balance of payment.When US Dollar apreciated toward Rupiah of course we need to pay more than usual to import the goods that we eager.

Less Foreign Capital,Investor will look forward to choose more luctrative countries where they can invest. In this case investor will be more interested in US investment instrument such as government bonds.The rise of the US interest rates will give investor more gain than before.So,investors will take their money from other countries and put an investment in US.
Indeed,the effect of the increasing interest rate dominantly gives massive  negative effect,still there is a positive effect of that.

Increasing value of Export.As we know before export and import are  contrary similar to two side of coin.in this case i will give an example. Suppose a good or service produced by a Indonesia exporter costs Rp13.980 per unit or equal $1 per 10 June.On 7 July The USD appreciate to become Rp.14.000.precisely on this day Some Indonesian-exporter export a service or a goods worth $1000.if the indonesian exporter exchange the USD into Rupiah it will become Rp14.000.000.Lets take a look if the indonesia exporter export on 10 june their money will become Rp.13.980.000.There is additional  Rp20.000  when the indonesia exporter export their goods or services on 7 July rather than 10 june.We can conclude that the export value increase toward US Dollar appreciation as the effect of the rise of US interest rate.


The rise of US interest rate will give massive effect on economic sector.As we know that many countries have an economic relation with US.Indonesia have to be prepared by applying some economic policy during this phenomenon to keep indonesia’s economy surrounding stay productive.

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