Rupiah Has The Potential To Strengthen, These Are The Cause Factors

JAKARTA - The rupiah exchange rate in trading Friday, September 27, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, September 26, 2024, the rupiah exchange rate on the spot market closed down 0.46 percent at the level of Rp. 15,165 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.52 percent to a price level of Rp. 15,171 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said the dollar strengthened after the sharpest rally since early June as traders waited for a speech from the major policymakers of the Federal Reserve in the future to get instructions on the rate of lower interest rates.

"While there is no clear catalyst for the recovery, investors appear to have a more nuanced view of how aggressive the decline in US interest rates will be in the future, with Fed speakers this week not conveying a unified view of the road ahead," he said in his statement, quoted Friday, September 27.

The weekly US unemployment claim data will be thoroughly investigated on Thursday night, given the focus of the Fed on switching to labor rather than inflation.

Ibrahim said traders still expect a huge drop in interest rates by 50 second-base points at the next Fed meeting in November, but the chances fell to 57.4 percent from 58.2 percent the day before based on FedWatch Tool from CME Group.

From a domestic perspective, economists estimate that Indonesia's economic growth is projected to be at the level of 5.2 percent this year and at the level of 5.3 percent by 2025. This growth will be driven by strategic and targeted fiscal policies, as well as financial deepening amid increasing challenges at the global level.

Prabowo-Gibran's new government will be able to implement a large-impact fiscal policy, including focusing on infrastructure, downstreaming, and the technology sector to encourage stronger and more sustainable growth.

So far, positive growth in the national economy is still supported by household consumption which accounts for half of Gross Domestic Product (GDP). However, economists are optimistic that Indonesia still has growth opportunities that have not been utilized through added value investment and strategic fiscal policies that encourage productivity and economic expansion.

From an external perspective, the stable flow of foreign direct investment (FDI) and strong trade surplus since 2020 will further boost growth and expand the economic base.

A strong commitment to fiscal policy, deep financial markets, and structural reforms. Then it will have an impact on strengthening the rupiah exchange rate in the future supported by capital flow (foreign funds entering) into Indonesia, a declining Fed Fund Rate (FFR), and a good and domestic balancesheet (financial balance sheet).

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, September 27, 2024, in the price range of IDR 15,100 - IDR 15,200 per US dollar.