Geopolitical Tensions For Rupiah Potentially Touches IDR 16,000 Per US Dollar

Financial Market and Commodity Observer Ariston Tjendra explained that the rupiah exchange rate against the US dollar was shaken by the external situation, namely the excalation of geopolitical tensions in the Middle East region due to Israel and Ukraine due to Russia, and the Fed's attitude that would not rush to cut its benchmark interest rate seeing still unstable US inflation data dropped to a target of 2 percent.

"This geopolitical tension can spread to the global economy, which causes supply disruptions, thereby increasing inflation and triggering a global economic slowdown. This has caused market participants to enter safe assets in US dollars and gold," he explained to VOI, Tuesday, April 2, 2024.

Ariston said the Fed was still voicing caution in lowering its benchmark interest rates because US economic data looked quite solid and could encourage an increase in inflation again.

"Last night the ISM version of PMI's data showed an expansion level after 16 months of contraction. This Fed's attitude caused the US bond yields to remain at a high level, so it is still attractive for market participants to invest in US assets," he explained.

According to Ariston, not to mention, the issue of the US Presidential Election where there is a projection that Donald Trump will win when faced with Biden. So that the dollar has the potential to strengthen if Trump comes to power because of Trump's US centric policy.

Ariston conveyed sentiment from within the country, namely the current account deficit that is currently being pressed by the rupiah because the need for dollars has increased.

Meanwhile, the issue of rising inflation and the prospect of future inflation can also be a suppression of the rupiah because this inflation will reduce purchasing power and slow economic growth.

"With the above factors, the opportunity for weakness is still open. The opportunity for an increase of Rp. 16,000 is still open," he said.

Ariston said that tonight, US economic data could be a mover for the movement of the rupiah vs US dollar, namely data on the number of job vacancies and factory order data.

According to Ariston, if these two data show improvement, the rupiah could weaken again against the US dollar and vice versa.

Ariston estimates that the movement of the rupiah on Wednesday, April 3, 2024, will be around Rp. 15,850-Rp. 16,000.

For information based on Bloomberg, the rupiah spot closed slightly lower by 0.02 percent to a price level of IDR 15,897 per US dollar in trading on Tuesday, April 2, 2024. Similarly, the rupiah at the Jakarta Interbank Spot Dollar Rate (Jisdor) of Bank Indonesia (BI) fell 0.01 percent to the level of IDR 15,897 per US dollar.