The rupiah’s depreciation continued on Monday, when it fell to 14,478 to the United States dollar from Rp 14,469 on Friday.
The currency started depreciating early May, after it was valued at Rp 14,245 to the dollar on May 2.
Analysts believe the escalating trade war between China and the US has made investors shy away from high risk assets.
Securities firm Samuel Sekuritas Indonesia analyst Ahmad Mikail said the trade war put investors in wait-and-see stance even though there was a chance that the US dollar index would fall from 97.9 to 97.8 on Monday.
He also said the dollar could weaken against other major global currencies, like the euro and the yen. “Investors prefer the yen as safe haven for their assets amid the escalating trade war,” Ahmad said as reported by kontan.co.id.
In the latest development in the trade war, the US prohibited Chinese telecommunications company Huawei from conducting any business with US telecommunication companies.
Ahmad estimated that the rupiah's exchange rate would close at between Rp 14,460 and Rp 14,480 to the dollar on Monday.
Meanwhile, securities firm Binaartha Sekuritas analyst Muhammad Nafan Aji Gusta projected that the rupiah would weaken further during the week. He also blamed the trade war for being the main cause of global economic uncertainty.
He estimated that the currency would move between Rp 14,170 and 14, 570 to the dollar next week. “The potential of the US dollar strengthening against the rupiah will continue next week,” Muhammad added. (bbn)