Rupiah Monday Potentially Continues Weakening, This Is The Cause

JAKARTA - The rupiah exchange rate in trading Monday, March 25, 2024 is expected to continue to weaken the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Friday, March 22, the rupiah spot exchange rate closed down 0.73 percent Rp15,783 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.71 percent to a price level of Rp15,773 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the Dollar strengthened at its highest level in 3 weeks due to the decline in the SNB interest rate overshadowing the Fed's prospects.

"Both dollar indicators jumped on Thursday after SNB unexpectedly cut interest rates, becoming the first major central bank to do so after a cycle of interest rate hikes extended due to the pandemic COVID-19," he said in his statement quoted Monday, March 25.

The Fed sharply increases its growth prospects in 2024. Although the central bank is expected to start lowering interest rates in June, its relative hawkish stance, compared to other central banks, is expected to benefit the dollar.

In addition, high-ranking PBOC officials hint that they still have more room to cut the ratio of bank reserves, which will open more liquidity in the economy. But such a move is a bad sign for the economy and the potential for greater US sanctions.

From an internal perspective, investment activities after the 2024 General Election (Pemilu) have started to increase and investors are no longer waiting and see, especially in companies that have an economic activity, business activities that continue to increase, such as sales, sales are starting to increase.

Meanwhile, the capital expenditure activity pattern has started to increase significantly after experiencing a decline. The increase in investment occurred in a number of companies in certain sectors, namely the food and beverage sector, wholesale trade, transportation, communications, and hospitality (hotels, restaurants and cafes).

In addition, the export sector related to downstreaming and mineral and coal also continues to increase. So that the 2024 economic growth is believed to be still 4.7-5.5 percent or the mid point is 5.1 percent.

Meanwhile, in February 2024, credit grew by 11.28 percent on an annual basis or year on year (yoy), especially in the Agriculture, Mining, Construction, Trade, Social Services, and Business World Services sectors.

In terms of demand, credit growth is supported by household and corporate performance which is expected to continue to increase after the election. Based on the use group, credit growth is supported by investment credit, working capital credit, and consumption credit of 11.82 percent yoy, 12.04 percent yoy, and 9.70 percent yoy, respectively.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Monday, March 25 in the price range of IDR 15,770 - IDR 15,850 per US dollar.