There is a Fresh Wind That Will Strengthen the Rupiah Today

JAKARTA - The rupiah exchange rate in trading on Thursday, April 18 2024 is expected to continue strengthening against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Wednesday, April 17, 2024, the spot rupiah exchange rate closed down 0.28 percent to IDR 16,220 per US dollar. Likewise, the Jakarta Interbank Spot Dollar Rate (Jisdor) Bank Indonesia (BI) rupiah exchange rate closed down 0.39 percent to a price level of IDR 16,240 per US dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi said traders remained biased towards the dollar after the release of higher-than-expected US inflation and retail sales data, which showed that inflation had remained stagnant in recent months.

"The warning from the Federal Reserve meant that most traders did not take into account an early cut in interest rates as well as worsening geopolitical tensions in the Middle East which pushed up demand for safe havens," he explained in his official statement, quoted Thursday, April 18.

Additionally, Powell's comments saw traders further reduce expectations for a rate cut in June, with the CME Fedwatch tool now showing a 79.2 percent chance that the central bank will keep rates steady. The tool also shows traders are pricing in a small chance of a 25 basis point rise

From an internal perspective, the International Monetary Fund (IMF) has again maintained its projection for Indonesia's economic growth in 2024 at 5 percent. The IMF has not changed its projection for the Indonesian economy at 5 percent.

Ibrahim said that at least the IMF has been consistent in its three consecutive reports regarding the country's economic prospects.

Despite maintaining this year's economic outlook, the IMF was observed raising Indonesia's economic projections in 2025 to 5.1 percent.

Previously, the IMF collectively gave a figure of 5 percent for Indonesia's economic projections, both in 2023, 2024, and 2025.

This is in line with the IMF's statement that developing countries that are members of the G20, one of which is Indonesia, plays an important role in global economic activity. Indonesia is the largest primary producer for the energy transition, namely nickel.

Meanwhile, the Government is optimistic that Indonesia's economy in 2024 will be higher than the IMF projection, namely at 5.2 percent, then in 2025 it is projected to reach the range of 5.3 percent-5.6 percent.

Ibrahim expressed the government's optimism regarding the solid 2024 and better 2025 projections, supported by increasingly stable political conditions after the presidential election (Pilpres) as well as various macro indicators being quite good and macro fundamentals also being strong, reinforcing optimism that the economy will continue to grow.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Thursday, April 18 2024 in the price range of IDR 16,170 - IDR 16,250 per US dollar.