Rupiah Potentially Weakens Ahead Of Weekend

JAKARTA - The rupiah exchange rate still has the potential to weaken on Friday 10 November 2023 in line with the strengthening of the US dollar and concerns about the potential economic slowdown. For information, based on Bloomberg data, the rupiah continued to weaken 0.03 percent to a level of Rp15,655 per US dollar on Thursday 9 November 2023 trading. Furthermore, at the benchmark Jakarta Interbank Spot Dollar Rate (JISDOR) of Bank Indonesia, the rupiah exchange rate was at Rp15,649 or weakened by 0.04 percent compared to the previous trading day. Ibrahim Assuaibi Director of PT.Laba Forexindo Berjangka said a number of Fed officials warned this week that the US interest rate would remain high for a longer period of time, and that markets should be cautious in betting on the decline in interest rates earlier. "The high inflation and robustness of the US economy could also push further interest rates up this year. Their comments somewhat offset the recent speculation that the Fed's interest rate hike cycle has ended, and led traders to turn back to assets affected by interest rates such as the dollar and Treasury," he explained, Friday 10 November. Ibrahim said that in Asia, China again carried out disinflation, but other signs of economic disputes in China became the biggest burden in the Asian market, as government data showed that consumer inflation and producers were shrinking in October. These data show that China is experiencing a disinflation for the second time this year, as repeated stimulus measures carried out by Beijing failed to sustain spending significantly. The weakness in China is also a bad sign for broader Asian markets, given their dependence on the country as trading partners. In order to maintain economic growth in 2023 by 5 percent, the government will focus on people's purchasing power. The world economy is currently under a trend of slowdown, especially experienced by Europe and China. Although the economic performance tends to strengthen, however, the fiscal condition of the USD fiscal is experiencing significant pressure that triggers financial market turmoil with the increase in UST yields in the last 1.5 decades. The dynamics of deceleration and increased global financial market uncertainty risk have had a significant impact on nearly all emerging markets, including Indonesia.

Meanwhile, another effect, Indonesia's economic growth in the third quarter of 2023 was recorded at 4.94 percent. Indonesia's economy has slowed down compared to the previous quarter which grew 5.17 percent, mainly due to the decline in export performance of goods and services. According to Ibrahim, the global slowdown trend is expected to continue and has the potential to drag growth in the fourth quarter back below 5 percent so that overall economic growth in 2023 is at risk below 5 percent. In addition, El Nino's impact of driving the increase in volatile food inflation due to rising rice prices also needs to be watched out for. "To respond to this condition, the government released a policy package for economic stabilization and protecting people's purchasing power. The policy package consists of three main policies," explained the first policy, namely the thickening of Bansos to protect the purchasing power of the poor and vulnerable. The second policy is that the acceleration of the distribution of the KUR program is aimed at strengthening MSMEs to support growth in the midst of increasing interest rates. The third policy is strengthening the housing sector.

Ibrahim conveyed that this policy was taken into account by considering the effects of large sector multipliers. As of September 2023, the performance of the housing sector has been in a slowdown trend, so intervention is needed to revive the performance of this sector. "This is expected to be able to support economic performance amid the risk of a global slowdown," he explained.

Ibrahim estimates that the rupiah will fluctuate but closed lower on Friday, November 10 trading in the price range of Rp. 15,640- Rp. 15,740 per US dollar.