US Economic Data Series Is Tough, Rupiah Has The Potential To Strengthen

JAKARTA - The rupiah exchange rate in trading Thursday, October 17, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Wednesday, October 16, 2024, the rupiah exchange rate on the spot market closed up 0.50 percent at the level of Rp. 15,510 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.12 percent to a price level of Rp. 15,536 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said US data showed a strong economy, while inflation in September rose slightly higher than expected, which led traders to cut bets on further large interest rate cuts from the Fed.

"The traders have set a nearly 100 percent chance of cutting 25 bp in November, with only 0.2 percent possible pause by the Fed, maintaining federal interest rates in the target range of 4.75 percent-5.0 percent, according to LSEG calculations," he said in his statement, quoted Thursday, October 17.

From a domestic perspective, according to expectations, Bank Indonesia's pass maintains its benchmark interest rate (BI rate) at the level of 6 percent at the Board of Governors' Meeting (RDG) in October 2024. In line with that, the deposit facility interest rate is also maintained at the level of 5.25 percent, and the lending facility interest rate is maintained at the level of 6.75 percent.

This arises amid the growing global dynamics, particularly the influence of geopolitical conditions and monetary policy in the United States.

The decision to maintain the BI rate of 6 percent is consistent with the direction of monetary policy to ensure that inflation remains under control in the target of 2.5 percent plus minus 1 percent in 2024 and 2025. As well as to support sustainable economic growth.

Currently, BI also continues to focus on the stability of the rupiah exchange rate, in line with the increasing uncertainty of the global financial market. In the future, BI continues to pay close attention to the space for lowering interest rates while still paying attention to the prospects for inflation, the rupiah exchange rate, and economic growth.

This RDG is the last time in the term of office of President Joko Widodo (Jokowi). This week, the elected presidential and vice presidential pair, Prabowo Subianto Gibran Rakaming Raka, will be sworn in on October 20, 2024.

Ibrahim estimates that the rupiah will fluctuate but close higher on trading Thursday, October 17, 2024, in the price range of IDR 15,410 - IDR 15,530 per US dollar.