Joe Biden Withdraws from US Presidential Election, Creating Market Uncertainty, Rupiah Predicted to Weaken

JAKARTA - The rupiah exchange rate on Wednesday, July 24, 2024, is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the rupiah exchange rate on Tuesday, July 23, 2024, the rupiah exchange rate on the spot market closed up 0.04 percent at IDR 16,214 per US dollar. Meanwhile, the rupiah exchange rate at the Jakarta Interbank Spot Dollar Rate (Jisdor) Bank Indonesia (BI) closed up 0.15 percent to IDR 16,204 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said that the increasing uncertainty regarding the US presidential election after Joe Biden withdrew also had an impact on the financial market.

"Although this political uncertainty has triggered a flow of safe-haven funds into gold, the resilience of the dollar has limited this flow," he said in his statement, quoted on Wednesday, July 24.

Meanwhile, gold continues to make strong gains this year, amid increasing optimism that the Federal Reserve will begin lowering interest rates starting in September.

From the internal side, President-elect Prabowo Subianto's ambition to achieve Indonesia's economic growth of 8 percent during his five-year term will be difficult to achieve if Indonesia's structural economic problems are not fixed.

Because of this problem, during President Joko Widodo's two terms in office, Indonesia's economic growth has stagnated at around 5 percent. Jokowi's target during the 2014 presidential election campaign was never achieved, namely to make the Indonesian economy grow by 7 percent.

The stagnation of Indonesia's economic growth at 5 percent was triggered by the unmaintained purchasing power of the Indonesian people, especially the middle class.

For information, in 2015 or Jokowi's first year effectively running the government, Indonesia's economic growth was only 4.8 percent annually or year on year (yoy), slowing down compared to 5.02 percent in 2014, based on data from the Central Statistics Agency (BPS).

In 2016, Indonesia's economic growth was only able to return to the level of 5.03 percent, then in 2017 it was 5.07 percent, 2018 reached 5.17 percent, and 2019 returned to the level of 5.02 percent. In 2020 or when the Covid-19 Pandemic broke out, the Indonesian economy contracted to minus 2.07 percent.

In 2021, the Indonesian economy began to stir again with a growth of 3.7 percent. Then, in 2022 it rose to 5.31 percent, and in 2023 it was only able to move to the level of 5.05 percent. In the first quarter of 2024, Indonesia's economic growth only reached 5.11 percent.

The source of Indonesia's economic growth is mostly supported by household consumption. Until 2023, the portion of public consumption to the rate of economic growth reached 53.18 percent. In the first quarter of 2024, the portion even swelled to 54.93 percent.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Wednesday, July 24, 2024 in the price range of IDR 16,200 - IDR 16,260 per US dollar.