Rupiah Predicted To Strengthen On Friday 3 November Trading, Driven By Domestic Positive Sentiment

Illustration (Photo: Doc. Antara)

JAKARTA - The movement of the rupiah exchange rate on Friday, November 3, 2023 is expected to strengthen, driven by domestic positive sentiment.

Quoting Bloomberg, the Rupiah exchange rate on Thursday 2 November, in the spot market rose 0.51 percent to the level of Rp15,855 per US dollar.

Furthermore, the Bank Indonesia (BI) Jisdor rupiah also strengthened 0.53 percent to the level of IDR 15.861 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the Central Statistics Agency (BPS) reported that domestic inflation in October 2023 was recorded at 2.6 percent on an annual basis (year on year/yoy).

The inflation in that period increased when compared to the previous month where inflation was recorded at 2.28 percent yoy.

"The increase in inflation was mainly triggered by rising food prices, including cayenne pepper, rice, and shallots, due to the prolonged dry season due to El Nino. In addition, inflation in October 2023 was influenced by the increase in non-subsidized gasoline prices in line with the increase in world oil prices," he explained in his statement, Friday, November 3.

In line with that, core inflation in October 2023 continued its downward trend, which was recorded at 1.9 percent yoy.

The development of core inflation is in line with the sloping growth in input costs, especially in the manufacturing sector.

According to Ibrahim, at the same time, the expansion of the manufacturing sector has shown signs of weakening, as seen from the decline in the Manufacturing PMI figure of 51.5 in October 2023, compared to 52.3 in the previous month.

With developments until October 2023, ibrahim estimates that the inflation rate will be maintained below the 3 percent level by the end of 2023.

Low inflation was influenced by low base effect from subsidized fuel price adjustments last year, as well as El Nino's mild impact on domestic volatile food prices.

"Considering this latest development, I estimate that general inflation at the end of the year is 2.7 percent, far below the top target of Bank Indonesia," he explained.

On the other hand, geopolitical conflicts still create uncertainty and pose risks to the inflation forecast.

Ibrahim added that the increase in oil prices, driven by geopolitical conflicts, is still at risk of triggering a surge in domestic inflation if global oil prices exceed $120 per barrel and the government must adjust the price of subsidized fuel in the country.

Ibrahim estimates that the rupiah will fluctuate but close higher on Friday, November 3 trading in the price range of IDR 15,800- IDR 15,890 per US dollar.