Amid The Expertation Of The US Interest Rate Cut, Rupiah Has The Potential To Strengthen

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

Quoting Bloomberg, the Rupiah exchange rate on Monday, October 14, 2024, the rupiah exchange rate on the spot market closed up 0.08 percent at the level of Rp. 15,566 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.17 percent to a price level of Rp. 15,581 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said traders were waiting for more signs about the US interest rate from a series of Federal Reserve speakers this week to get more clues about interest rates, while betting on lower interest rates in November continues.

"This week's focus is on the speeches of several Fed officials, starting with Fed Minneapolis President Neel Kashkari and Governor Christopher Waller on Monday," he said in a statement, quoted Tuesday, October 15.

Ibrahim said the Fed was widely expected to cut interest rates smaller, 25 basis points in November, especially after recent inflation and labor market readings read above expectations.

From a domestic perspective, the World Bank or World Bank and a number of other international institutions compactly predict Indonesia's economic growth in 2024 and 2025 will tend to be stable above 5 percent.

In the last two quarters, the Central Statistics Agency (BPS) recorded that the country's economy managed to grow above 5 percent despite indications of a slowdown. Where in the first quarter of 2024 it grew by 5.11 percent year on year (YoY), and in the second quarter of 2024 it grew by 5.05 percent.

The most recent projection came out of a World Bank report entitled East Asia and Pacific Economic Update October 2024. The agency raised Indonesia's economic growth projections for 2024 and 2025, each to 5 percent and 5.1 percent.

In addition, Bank Indonesia (BI) reported that Indonesia's Foreign Debt as of August 2024 reached 425.1 billion US dollars, growing 7.3 percent on an annual basis (year on year / yoy).

The position of the August 2024 external debt is also influenced by the factor of weakening the US dollar currency against the majority of global currencies, including the rupiah.

The government's external debt position in August 2024 was 200.4 billion US dollars or grew by 4.6 percent (yoy), higher than the growth in July 2024 of 0.6 percent (yoy).

The development of the external debt is mainly influenced by the increase in foreign capital inflows in domestic Government Securities (SBN), along with the maintained investor confidence in Indonesia's economic prospects.

Meanwhile, the private sector has a debt of 197.8 billion US dollars or grew by 1.3 percent (yoy), slightly higher than the growth in July 2024 of 0.5 percent (yoy).

The development of the external debt was mainly driven by external debt, non-financial corporates, which recorded a growth of 1.6 percent (yoy).

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Tuesday, October 15, 2024, in the price range of IDR 15,510 - IDR 15,580 per US dollar.