Rupiah Expected To Be Strong Again Driven By Domestic Economy

JAKARTA - The rupiah exchange rate in trading Tuesday, February 13, 2024 is expected to move again fluctuating but closed higher against the United States (US) dollar driven by the domestic economy.

Quoting Bloomberg, the Rupiah exchange rate on Monday, February 12, the rupiah spot exchange rate closed higher by 0.26 percent Rp15,594 per US dollar. Meanwhile, Jisdor's rupiah exchange rate closed up 0.46 percent to a price level of Rp15,612 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the Chinese, Singapore, South Korea, and Hong Kong markets were closed for the Lunar New Year holiday, while the Japanese market closed for the commemoration day, leaving a limited trading volume, while the dollar fell slightly ahead of the main inflation data released this week.

CPI data for January will be released on Tuesday and is expected to show a slight decline in inflation. However, price pressure is expected to remain relatively stable, with the core CPI figure in particular going to remain well above the Federal Reserve's annual target of 2 percent.

"A scenario that provides a greater impetus for the Fed to maintain higher interest rates over a longer period of time," he explained in a statement quoted Tuesday, February 13.

The decline in speculation over early monetary easing by the Fed has hit Asian currencies in recent sessions, and put the dollar within its peak within three months.

From an internal point of view, Ibrahim saw that the condition of economic growth in 2023 was 5.05 percent, so he was of the view that Indonesia's economic growth would reach 5.07 percent by 2024.

This growth is supported by household consumption which continues to increase. In general, until the end of 2023 Indonesia's economic performance was still relatively good. Domestic economic resilience is quite strong and Indonesia's inflation is recorded as low compared to other countries.

The projection of the International Monetary Fund (IMF) and the World Bank on the Indonesian economy also tends to be resilient for this year at around 5 percent, so that this year's economic growth is expected to be solid.

In addition, there are several record risks that will affect Indonesia's economic growth both globally and domestically. From a global perspective, the first is China's economic growth which tends to slow down, due to the current real estate and property crisis in the bamboo curtain country.

China's economic slowdown, not only has an impact on global growth, but has an impact on the Indonesian economy. More than 20 percent of Indonesia's exports to China, so this slowdown affects global commodity prices, coal, palm oil, and others.

Second, the higher for longer condition is related to the direction of the Fed's interest rate which has remained high estimated until the first semester of this year. Third, namely geopolitical conditions due to the Russian-Ukraine war, as well as Israel-Hamas. The impact of this geopolitical condition has begun to be seen where the world's financial markets tend to strengthen.

Meanwhile, on the domestic side, the first risk is due to general elections or elections which will take place simultaneously in Indonesia on February 14, 2024.

However, from the implementation of this year's elections, it can have a positive impact, especially on increasing spending or household consumption. The next domestic risk, referring to data from the Central Statistics Agency (BPS), where food inflation tends to be high influenced by the El Nino factor.

Ibrahim estimates that the rupiah will fluctuate but close higher on trading Tuesday, February 13 in the price range of IDR 15,550- IDR 15,630 per US dollar.