Rupiah Projected Weakening Along With US Dollar Strengthening
JAKARTA - The rupiah exchange rate in trading Wednesday, February 7, 2024 is expected to fluctuate again but closed lower against the United States (US) dollar in line with the strengthening of the US dollar and the expedivation of the reduction in the benchmark interest rate.
Quoting Bloomberg, the Rupiah exchange rate on Tuesday, February 6, the rupiah spot exchange rate was closed lower by 0.14 percent Rp15,730 per US dollar. Meanwhile, Jisdor's rupiah exchange rate closed down 0.18 percent to a price level of Rp15,734 per US dollar.
Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said the Institute for Supply Management (ISM) said the growth of the US services sector increased in January due to increased new orders and job recovery. This shows that the momentum of economic growth from the fourth quarter extends to the new year.
Meanwhile, PMI non-manufacturing ISM increased to 53.4 from 50.5 in December, higher than the economist forecast surveyed by Reuters by 52.0. The figure above 50 shows growth in the service industry, which powers more than two-thirds of the economy.
"The data adds to the US employment report released on Friday which far exceeds expectations and forces markets to re-adjust prospects for lowering interest rates, dollar powers, and how high Treasury returns are, which act to increase US currencies," he said in a statement quoted Wednesday, February 7.
The market begins to take into account the possibility of lowering interest rates early by the Fed. Higher interest rates for longer periods reduce the attractiveness of risk-oriented assets and provide high yields, and also limit foreign capital flows to regional markets.
From an internal point of view, economic growth over the past 5 years has yet to show a significant increase. Where the highest is only above 5 percent. However, the dream to become a developed country requires a growth rate of economy to grow in the range of 6-7 percent.
In detail, based on data from the Central Statistics Agency (BPS), economic growth in 2019 was 5.02 percent. Then, it declined in 2020 which contracted 2.07. This was due to the Covid-19 pandemic which hampered the growth rate.
Furthermore, in 2021 the economy will recover with an achievement of economic growth of 3.70 percent. Meanwhile, in 2022 and 2023 economic growth will return above 5 percent, namely 5.31 percent and 5.05 percent, respectively.
In addition, Ibrahim said that in order to achieve Indonesia to become a developed country, ICOR (incremental capital output ratio) must increase at 4. Currently, Indonesia's ICOR compared to other countries is still high, around 6 less.
However, ICOR is currently a natural thing, because Indonesia is building infrastructure and logistics that need time to feel the impact, so that in the future it can boost economic growth by improving ICOR.
Furthermore, according to Ibrahim, the trade sector must also be a concern. Where the trade sector is part of the continuation of the industry. So, if there is already integration between the manufacturing industry and the trade industry, it is hoped that economic growth will increase to reach the target of 6-7 percent.
Ibrahim estimates that the rupiah will fluctuate but closed lower on Wednesday, February 7 trading in the price range of Rp. 15,710- Rp. 15,770 per US dollar.