Rupiah Expected To Strengthen After The Release Of US Labor Data

Illustration (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate on Monday, November 20, 2023 is expected to strengthen slightly after the release of US labor data which is lower than expected.

The current market focus will be on Bank Rakyat China, which will decide the main loan benchmark interest rate.

Quoting Bloomberg, the Rupiah exchange rate on Friday, November 17, the rupiah spot exchange rate rose 0.40 percent to Rp15,493 per US dollar.

Meanwhile, Jisdor's rupiah exchange rate rose 0.58 percent daily to a price level of IDR 15,504 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the dollar index was stable against other currencies on Friday.

However, the greenback is expected to weaken by nearly 1.5 percent this week, due to a series of moderate economic readings.

Especially weak labor data sparked more speculation that the federal Reserve will cut interest rates by mid-2024.

Following a lower October inflation readout than expected, data on Thursday November 16 showed that weekly unemployment claims grew more than expected over four consecutive weeks.

The data sparked growing speculation that the Fed had finished raising interest rates, and is likely to start cutting interest rates by mid-2024.

The Fed meeting's mistake in October will be released next week, and will also provide more clues regarding the central bank's prospects.

Then, the data released this week shows several signs of China's economic resilience, along with industry production growth and retail sales which are greater than expected.

However, other economic indicators in October still show a consistent weakening of the Chinese economy, especially when the Chinese economy slips into the disinflation area.

"The current focus is on Bank Rakyat China, which will decide on the main loan benchmark interest rate on Monday. However, the central bank is expected to maintain interest rates at record lows, as the bank has difficulty maintaining a balance between supporting economic growth and stemming the weakening of the yuan," he said in his statement, Monday, November 20.

Indonesia will face a political year in 2024. There is a lot of doubt surrounding investors to invest because of the potential for instability caused by political turmoil. The market believes that the Indonesian economy will not be hampered due to the General Election (Pemilu) in 2024.

On the other hand, Indonesia is a comfortable place to invest. It looks like there are a lot of foreign direct investments (FDI) entering Indonesia.

This shows that investors have taken into account the profit-loss of this choice.

Highlighting the performance of Indonesian economic instruments, such as Bank Indonesia and the Ministry of Finance who are good, are even able to bring the Indonesian economy to its recovery after the Covid-19 pandemic and face global economic instability.

Indonesia's economic growth has indeed slowed to 4.94 percent (yoy) in the III quarter, missing the 5 percent prediction. However, this does not rule out the fact that Indonesia is a potential market, because it has a large population, young demographics, and growth in Gross Domestic Products which are calculated to be consistent.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Monday, November 20 in the price range of IDR 15,460- IDR 15,540 per US dollar.