Rupiah Predicted to Sluggish in the Range of IDR 15,910-IDR 15,960 per US Dollar

JAKARTA - The rupiah exchange rate in trading on Thursday 4 April 2024 is expected to continue weakening against the United States (US) dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi estimates that the rupiah will fluctuate but close lower in trading on April 4 2024 in the price range of IDR 15,910 - IDR 15,960 per US dollar.

He said the greenback had surged in recent sessions as some Fed officials warned that the central bank could keep interest rates higher for longer in the face of high inflation and labor market strength.

"Further signals on this will be released this Friday, with nonfarm payrolls data for March. This figure has consistently exceeded expectations in recent months, amid continued strength in the US labor sector," he explained in a statement officially, quoted Thursday, April 4.

Additionally, risk appetite took a fresh blow on Wednesday after an earthquake in Taiwan destroyed the island's infrastructure and leading chipmaking factories, and triggered Tsunami warnings in parts of Japan.

Private PMI data on Wednesday showed growth in China's services sector improved in March. The figure comes just days after the official PMI for China's manufacturing sector was positive, indicating improving conditions in the world's second-largest economy.

From an internal perspective, Indonesia's inflation rate in March 2024 was recorded at 0.52 percent monthly (month-to-month/mtm) or reached 3.05 percent annually (year-on-year/yoy). Economists predict that inflation in April 2024 will still be high.

Realized inflation in March 2024 will still be within this year's target range, namely 1.5 percent-3.5 percent. However, this figure is the highest figure since August 2023, with food prices experiencing the most significant increase in the last 18 months, coinciding with the fasting month of Ramadan and before the celebration of Eid al-Fitr or Eid.

The increase in inflation in March 2024 was mainly driven by volatile price inflation, especially food prices, which were influenced by factors on the supply and demand sides.

In addition, domestic food supplies continue to be disrupted due to the ongoing impact of El Nino, although at a lower level compared to the previous period, while food demand is increasing due to the seasonal impact of the month of Ramadan and there is the potential for continued short-term inflation risks, especially in April 2024 which coincides with the momentum of Eid al-Fitr.

Meanwhile, the risk of inflation related to food prices will decrease as the El-Nino effect diminishes in the second semester of 2024. However, inflationary pressure in the second semester of 2024 could arise from core inflation due to the implementation of excise taxes on plastic and sweetened packaged drinks.

Previously, on the Rupiah exchange rate on Wednesday 3 April 2024, the spot rupiah exchange rate closed down 0.14 percent to a level of IDR 15,920 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) Bank Indonesia (BI) rupiah exchange rate closed slightly higher by 0.07 percent to a price level of IDR 15,923 per US dollar.