Affected by Various Sentiments, the Rupiah's Movement on Tuesday is Predicted to Weaken

JAKARTA - The rupiah exchange rate on trading Tuesday, April 2 2024 is expected to continue weakening against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday 1 April 2024, the spot rupiah exchange rate closed down 0.24 percent to IDR 15,894 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) Bank Indonesia (BI) rupiah exchange rate closed down 0.23 percent to a price level of IDR 15,909 per US dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi said that the personal consumption expenditure (PCE) price index rose 0.3 percent in February.

"The report also shows that consumer spending increased the most in a year last month, underscoring the resilience of the economy. Most markets around the world were closed on Friday, and European markets were also closed on Monday," he explained in his official statement, quoted Tuesday, April 2.

Ibrahim said markets were now pricing in a 68.5 percent chance of a Fed rate cut in June versus a 57 percent chance at the end of last week, the CME FedWatch tool showed. Traders also expect cuts of 75 basis points this year.

"Investors' attention will turn to March employment data due later, with a weak employment report further increasing the chances of the Fed starting its policy easing cycle starting in June," he explained.

From an internal perspective, the Central Statistics Agency (BPS) announced that inflation in March 2024 reached 0.52 percent on a monthly basis month to month (mom) on Monday, April 1, 2024, and was relatively higher compared to the previous month and last year. This inflation was triggered by an increase in food ingredients, rice, sugar, chicken meat, chicken eggs and garlic, during this Ramadan.

Meanwhile, annual inflation reached 3.05 percent and calendar year inflation was 0.93 percent. The inflation rate was 1.42 percent and the share was 0.41 percent, with the main contributor to inflation in this group being eggs contributing 0.09 percent, chicken meat contributing 0.09 percent, rice contributing 0.09 percent, cayenne pepper 0.02 percent, onions whites share 0.02 percent.

Ibrahim said that it was not just the inflation factor that influenced the weakening of the rupiah currency, but the large capital outflow that occurred in the last two weeks also coincided with the lawsuit filed with the Constitutional Court (MK).

"The continuation of the lawsuit until the examination is received could be a negative sentiment for the financial markets, because this could cause investors to worry about the uncertainty of Indonesia's political conditions," he said.

Ibrahim estimates that the rupiah will fluctuate but will close lower in trading on April 2 2024 in the price range of IDR 15,880 - IDR 15,940 per US dollar.