The Market For Anticipating US Economic Change, Rupiah Is Predicted To Strengthen

JAKARTA - The rupiah exchange rate in trading Tuesday, November 5, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday, November 4, 2024, the rupiah exchange rate on the spot market closed down 0.13 percent at the level of Rp15,753 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.18 percent to a price level of IDR 15,751 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said investors are preparing to face a possible change in direction this week for the global economy as the United States selects a new leader, and are likely to cut interest rates again with great implications for bond yields.

In addition, the market is taking some positive signals from the reading of US non-farm payroll that are weaker than expected on Friday, which further strengthens betting that the cooling labor market will bring more interest rates cuts from the Federal Reserve.

"The economists expect the US Federal Reserve to cut interest rates by 25 basis points," he said in a statement quoted on Tuesday, November 5.

Meanwhile, from within the country, the market responded negatively to the release of the Indonesian Manufacturing Purchasing Managers Index (PMI) data in October 2024 which was still at the contraction level of 49.2 the same as the previous month.

The PMI has shown contraction since July 2024, starting at the level of 49.3, and declining further to 48.9 in August.

Thus, the national manufacturing sector has contracted for four consecutive months. Previously, in June, PMI was still at an expansive level above 50, which was 50.7.

The S&P Global report shows that Indonesia's manufacturing sector experienced a marginal decline in operations during October 2024 and has continued to decline in production, demand, and employment since September.

This decline was due to low market activity, which in some cases was influenced by geopolitical uncertainty, making clients be vigilant and hold back activities.

Geopolitical uncertainty has led to a decline in new export demand for eight consecutive months, both in the domestic and international markets.

The sluggish business condition also makes the company reduce the average number of staff three times in the last four months.

Meanwhile, purchasing activities continued to decline, extending the period of decline in Indonesia's manufacturing index to four months. This decline is related to the weak demand trend and production.

Cost inflation also decreased in October, reaching its lowest position since August 2023.

As prices rise, this is associated with harvest challenges that lead to an increase in the prices of some foodstuffs.

Overall, the inflation rate is still quite high, which encourages companies to increase prices, although only on a small scale and at a below average rate.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Tuesday, November 5, 2024, in the price range of IDR 15,690 - IDR 15,770 per US dollar.