The Rupiah Is Predicted To Strengthen Amid US Inflation Data Wait

JAKARTA - The rupiah exchange rate in trading Wednesday, August 14, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, August 13, 2024, the rupiah exchange rate on the spot market closed down 0.19 percent at the level of Rp. 15,955 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate closed lower by 0.30 percent to a price level of Rp. 15,963 per US dollar.

Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi said the dollar index moved narrowly against other currencies, extending its sluggish last night performance due to anticipation ahead of major US inflation data this week which is likely to be a factor in the prospect of lowering interest rates.

"This week's focus is on data on the consumer price index from the US, which will be released on Wednesday. The reading is expected to show inflation eases slightly in July," he said in a statement, quoted Wednesday, August 14.

Ibrahim conveyed signs of a further decline in inflation giving the Federal Reserve more push to cut interest rates, especially amid growing concerns that the US economy is heading for a recession.

Ibrahim said the market was divided into 25 and 50 basis points in September, with inflation data on Wednesday likely to provide more insight into potential cuts.

Beyond inflationary data, industry production readings and retail sales will also provide more signal about the world's largest economy in the world this week.

From the domestic side, the State Revenue and Expenditure Budget (APBN) as of July 2024 recorded a deficit of IDR 93.4 trillion or equivalent to 0.41 percent of gross domestic product (GDP). The deficit is wide from the previous month or June 2024, which is IDR 77.3 trillion or 0.34 percent of GDP. Of the total posture, in July 2024 we have a deficit of IDR 93.4 trillion or 0.41 percent of GDP, it is still far from the total APBN deficit [planned for 2024].

Overall, the 2024 State Budget is designed at IDR 522.8 trillion or 2.29 percent of GDP. This means that the deficit that occurred in July 2024 is still within the government's projection range. Meanwhile, state revenues during January - July 2024 reached IDR 1,545.4 trillion or equivalent to 55.1 percent of the revenue target.

The revenue was recorded to have decreased 4.3 percent from the same period the previous year. Meanwhile, the realization of state spending in January - July 2024 was recorded at IDR 1,638.8 trillion or 49.3 percent of the government's allocation. The realization of spending was recorded to have jumped 12.2 percent from the same period the previous year.

Unlike this year, the July 2023 State Budget is recorded to still experience a surplus or higher state revenues than the realization of its expenditures. In July 2023, the State Budget still experienced a surplus of IDR 153.5 trillion or 0.72 percent of GDP.

The surplus occurred because the state revenue of Rp1,614.8 trillion was higher than the actual expenditure of Rp1,461.2 trillion. Along with this realization, the primary balance of the State Budget as of July 2024 was recorded to be still a surplus of Rp179.3 trillion. In comparison, the primary balance in July 2023 was recorded at Rp394.5 trillion.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Wednesday, August 14, 2024, in the price range of IDR 15,750 - IDR 15,860 per US dollar.