Rupiah Potentially Weakening, This Is The Cause

JAKARTA - The rupiah exchange rate in Friday, March 15, 2024, is expected to weaken again against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, March 14, the rupiah spot exchange rate closed down 0.03 percent Rp15,580 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.03 percent to a price level of IDR 15,582 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said that the reading of the US Consumer Price Index (CPI) has made market focus shift to reading US producer price index (PPI) inflation and upcoming retail sales.

"Both of them are expected to be a factor in the Federal Reserve's views on interest rates," he said in his statement quoted on Thursday, March 14.

The data also comes before next week's Fed meeting, where the central bank is expected to keep interest rates stable and signal that there are no plans to start relaxing policies immediately.

A number of Fed officials have warned that the decline in interest rates will largely be determined by the inflation rate in the coming months.

Rigid inflation and higher inflation are the two biggest considerations for the Bank of Japan to start reducing negative interest rates and yield curve control policies (YCC).

BOJ will hold a meeting next week, with media reports showing that an end to the negative interest rate and the YCC could have been held at the time or at a meeting in April.

Ibrahim conveyed that the recent signs of Japan's economic resilience also further strengthened BOJ's expectations, which were not too dovish.

From an internal point of view, Bank Indonesia (BI) reported that consumer surveys of economic conditions in February 2024 decreased.

This is reflected in the Consumer Confidence Index (IKK) in February 2024 at the level of 123.1, compared to the previous month of 125.

However, during February 2024, consumer confidence was observed to remain optimistic in all expenditure categories.

An increase in optimism was recorded in respondents with an expenditure of IDR 1-2 million.

Based on age, consumer confidence in February 2024 was also observed to be optimistic, especially in the 20-40 year age group.

Spatially, IKK increased in most cities surveyed, the largest in Palembang City by 5.0 points, followed by Denpasar 3.1 points and Bandung 2.7 points.

Meanwhile, some other cities recorded a decrease in IKK, especially in Banjarmasin City by 12.7 points, followed by Surabaya 12.6 points and Medan 11.2 points.

However, consumer optimism remains strong driven by consumer confidence in current economic conditions and expectations for the future economy. It was noted that the Current Economic Condition Index (IKE) and the Consumer Expectation Index (IEK) of February 2024 were 110.9 and 135.3, respectively.

The increase in IEK was driven by increased expectations of income and availability of jobs, which increased by 138.6 and 137.0 in February 2024, respectively, from 134.8 and 133.7 in January 2024.

Ibrahim estimates that the rupiah will fluctuate but closed lower on Friday, March 15 trading in the price range of IDR 15,550 - IDR 15,620 per US dollar.