Expectations For The Fed's Interest Rate To Increase, The Initial Rupiah Of The Week Has The Potential To Strengthen

JAKARTA - The rupiah exchange rate in trading Monday, July 15, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Friday, July 12, 2024, the rupiah exchange rate on the spot market closed up 0.36 percent at the level of Rp. 16,137 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.28 percent to a price level of Rp. 16,154 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said Greenback was hit by CPI data that were weaker than expected, which showed inflation was slightly calmer than expected in June. This figure raises speculation that the Federal Reserve will be more confident in starting to cut interest rates.

"The traders expect 83.4 percent likely that the Fed will lower interest rates in September, compared to the 64.7 percent chance seen last week, according to the CME Fedwatch," he said in a statement, quoted Monday, July 15.

On the other hand, Bank of Japan's balance sheet data, which will be released in July, is expected to provide further clarity on whether the government intervenes. Traders also speculated whether the short position on yen was depressed by the dollar's sharp decline, following the weak CPI reading in June.

China's trade surplus has surged near its highest level in the last two years, while exports have also grown bigger than expected. However, the increase in trade rates against major Chinese exports, such as electric vehicles, can offset this trend.

From an internal perspective, the Government has predicted that Indonesia's economic growth will still grow 5.2 percent by the end of the year in accordance with the assumption that economic growth in the APBN is 5.2 percent.

Although, the current global economy is still stagnant, and various international institutions estimate Indonesia's economic growth in 2024 below that level.

The International Monetary Fund or the IMF even estimates that Indonesia's economic growth in 2024 will only be 5 percent. Likewise, the World Bank or the World Bank, which estimates that Indonesia's economic growth this year is only 5 percent. Bank Indonesia also considers the 2024 economic growth to be only 5.1 percent.

The potential for Indonesia's economic growth of up to 5.2 percent by the end of the year will be supported by the activity of exports and investments in Indonesia.

Ibrahim said that for June's exports, which will be released on July 15, it is predicted that it will be quite good so that it will show another export recovery. As for investment, it can be seen that government infrastructure projects are running, including national strategic projects or PSN.

On the other hand, public consumption also has the potential to revive in the second half of this year, supported by government spending support which will increase 2.6 percent by the end of the year from the set ceiling, state spending will swell to IDR 3,412.2 trillion, or reach 102.6 percent of the target in the 2024 State Budget of IDR 3,325.1 percent.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Monday, July 15, 2024, in the price range of IDR 16,080 - IDR 16,150 per US dollar.