Rupiah Kembali Berpotensi Meweak, Kekhawatiran Inflasi AS Dan Geopolitik Meningkat

JAKARTA - The rupiah exchange rate in trading Friday, May 31, 2024 is expected to weaken again against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, May 30, 2024, the rupiah spot exchange rate closed down 0.65 percent to the level of Rp. 16,265 per US dollar. Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.57 percent to a price level of Rp. 16,253 per US dollar.

Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi said most traders remained biased against the greenback due to a series of hawkish signals from the Federal Reserve, as officials warned that they needed more confidence that inflation was easing.

In addition, several Fed officials also flag the possibility of further interest rate hikes if inflation remains stable.

"The first quarter of the revised data on gross domestic product (GDP) will be released on Thursday, and is expected to show a sustainable US economic resilience. Economic power gives the Fed more room to maintain higher interest rates longer," he explained in his official statement, quoted Friday, May 31.

Ibrahim said the main focus this week is PCE price index data, which is a measure of Fed's choice of inflation. The data is expected to show stable inflation until April which will be released on Friday. Several Fed officials will also deliver their speeches in the coming days.

In addition, geopolitical tension in the Middle East continues to increase after Israeli troops control the buffer zone along the border between the Gaza Strip and Egypt. Thus, Israel has effective authority over the entire Palestinian land border.

In addition, Israel also continues to carry out deadly attacks on Rafah, despite orders from the International Court to end it. Rafah is a place of half of Gaza's previous 2.3 million residents displaced.

From an internal point of view, the market responded negatively to the position of government debt in April 2024 reaching IDR 8,338.43 trillion or equivalent to 38.64 percent of Indonesia's gross domestic product (GDP). The position of debt increased compared to the position in the previous month which was recorded at IDR 8,262.10 trillion or equivalent to 38.79 percent of GDP.

Based on the book APBN Kita Edition in May 2024, it is explained that the majority of government debt comes from within the country with a proportion of 71.18 percent, in line with the general policy of debt financing that optimizes domestic financing sources and utilizes foreign debt as a complement.

Based on its instruments, the composition of government debt is mostly in the form of Government Securities (SBN) which reached 87.94 percent. If detailed, as of the end of April 2024, financial institutions hold around 43.3 percent of domestic SBN ownership, consisting of 24.5 percent of banking and 18.8 percent of insurance and pension companies.

Furthermore, the ownership of domestic SBN by Bank Indonesia is around 21.3 percent, which among other things is used as an instrument for monetary management. Meanwhile, foreigners only have a domestic SBN of around 13.8 percent including ownership by the government and foreign central banks.

Therefore, the government stated that it remains consistent in managing debt carefully and measurably by maintaining the risk of interest rates, currencies, liquidity, and optimal maturity. Meanwhile, the ratio of government debt until April 2024 which exceeds 38.64 percent is still maintained below the safe limit of 60 percent of GDP in accordance with Law no. 17/2003 on State Finance.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Friday, May 31, 2024 in the price range of Rp. 16,250 - Rp. 16,330 per US dollar.