The Rupiah Potentially Weakens Amid The Expertation Of The US Interest Rate Cut

JAKARTA - The rupiah exchange rate in trading Thursday, October 10, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Wednesday, October 9, 2024, the rupiah exchange rate on the spot market closed up 0.16 percent at the level of Rp. 15,630 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed slightly higher by 0.41 percent to a price level of IDR 15,607 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said investors stopped for a moment to assess the prospect of interest rates for the United States.

This week's small US data calendar provided a break after a strong work report last Friday caused the dollar to strengthen and put the market at ease the expected rate-decreasing scale.

"Then on Wednesday, investors will get minutes of a Federal Reserve meeting in September, which will show discussions about what at that time appeared to be a deteriorating labor market ending with all but one policymaker agreeing to cut 50 basis points," he said in his statement, quoted Thursday, October 10.

However, strong non-farm payroll data has made the market reassess the expectations of lowering the Fed interest rate in the near future.

Investors now have about 85 percent chance of a quarter-base point drop taken into account, and it is unlikely Fed will allow interest rates to remain unchanged, the CME FedWatch tool shows.

The US Consumer Price Index report in September on Thursday will be the main part of this week's data.

From a domestic perspective, the Bank Indonesia (BI) Consumer Survey in September 2024 indicated that consumer confidence in economic conditions was maintained.

This is reflected in the Consumer Confidence Index (IKK) in September 2024 which is at an optimistic level of 123.5.

Based on the BI Consumer Survey published on Tuesday, October 8, consumer confidence in September 2024 was driven by consumer confidence in the current economic conditions and expectations of future economic conditions that remain optimistic.

The Current Economic Condition Index (IKE) and the Consumer Expectation Index (IEK) of September 2024 were recorded at 113.9 and 133.1, respectively.

In September 2024, consumer confidence was observed to remain optimistic in all expenditure categories.

The increase in IKK was recorded in respondents with expenditures of IDR 3.1 to IDR 4 million.

In addition, public consumption increased in September 2024. However, in the same period the level of community savings decreased.

This means that people still tend to eat savings (expert) to meet their daily needs.

The Bank Indonesia Consumer Survey noted that in September 2024, the average proportion of consumer income for consumption (average property to consumer ratio) was recorded to have increased slightly compared to the previous month, from 73.5 percent to 74.1 percent.

Meanwhile, the proportion of consumer income stored (saving to income ratio) or savings was recorded to have decreased slightly compared to the proportion in the previous month, which was 15.3 percent from 15.7 percent.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Thursday, October 10, 2024, in the price range of IDR 15,610 - IDR 15,730 per US dollar.