Market Waiting for US Economic Data, Here's the Rupiah Prediction Thursday, October 26, 2023

Illustration (Photo: Doc. Antara)

JAKARTA - The movement of the rupiah against the United States (US) dollar in trading Thursday, October 26 will still be influenced by uncertain global economic conditions and awaiting the release of US economic growth data for the third quarter of 2023 and US inflation in September 2023.

For information, based on Bloomberg data, the rupiah closed down 0.13 percent to IDR 15,870 per US dollar in trading Wednesday, October 25.

According to Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) reference rate, the rupiah exchange rate was at IDR 15,871, weakening compared to the previous trading day of Rp. 15,869.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi said that uncertain global economic conditions have resulted in crude oil prices continuing to creep up and this will affect domestic conditions which are currently still dependent on crude oil from other countries.

As a result of the increase in oil prices due to the strengthening of the dollar, imported materials continue to creep up, especially when coupled with a fairly long dry season (El Nino), public consumption has decreased.

"For trading today, October 26, the rupiah moved fluctuating but closed lower in the range of IDR 15,850 - IDR 15,930 per US dollar," he explained in his official statement, Wednesday, October 25.

Ibrahim said, in order to help increase public consumption, the Government has prepared a number of economic policy packages to maintain economic growth, in the form of various incentives that will be provided, including value added tax (VAT) incentives for property, rice assistance and direct cash assistance (BLT).

Meanwhile, BLT will be given to beneficiary families (KPM) in the amount of IDR 200 thousand for 2 months, namely November and December 2023.

According to Ibrahim, the government will also provide incentives again in the form of rice assistance again in December 2023 amounting to 10 kilograms per KPM.

This assistance is provided to 20 million KPM who have registered. Meanwhile, the manufacturing sector did not receive incentives because it was considered still in the good and expansive category for the Purchasing Manager's Index (PMI).

In addition, Bank Indonesia continues to strengthen coordination with all relevant authorities to continue to encourage economic growth amidst pressure on the global economy which continues to slow down due to high inflation caused by the crisis of Russia's invasion of Ukraine and the crisis in the Middle East between Israel and Hamas (Palestine) which It's heating up again.

"And continue to optimize the policy mix strategy, in order to maintain macroeconomic and financial system stability to support further economic recovery," he said

Ibrahim said the dollar index, which measures the greenback against six other currencies, was steady at 106.17, rebounding from a one-month low of 105.35 in the previous session.

S&P Global on Tuesday said the U.S. Composite Purchasing Managers' Index, which tracks the manufacturing and services sectors, rose to its highest level since July. The data showed continued resilience in the U.S. economy, which in turn gives the Federal Reserve more room to continue raising interest rates.

According to Ibrahim, the market is now mostly waiting for further economic cues from the US this week, especially third-quarter gross domestic product (GDP) data due on Thursday.

"Signs of resilience in the US economy will give the Fed more room to keep interest rates higher for longer, and also reduce the appeal of gold as a safe-haven asset," he said.

The central bank will meet next week to decide on interest rates, although markets widely expect the Fed to keep policy on hold.

However, Fed officials have signaled at least one more rate hike this year, and rates will stay higher for longer, at least through the end of 2024.