Today's Rupiah Is Projected To Continue Strengthening Driven By Expectations For Cutting US Interest Rates

JAKARTA - The rupiah exchange rate in trading Wednesday, November 20, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, November 19, 2024, the rupiah exchange rate on the spot market closed up 0.08 percent at the level of Rp. 15,845 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.20 percent to a price level of Rp. 15,816 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the dollar weakening was due to a strong inflation reading from last week, coupled with a signal that was underdovish from the Federal Reserve, only slightly blocking the bet that the Fed would cut interest rates in December.

"The traders expect a 55.7 percent chance of cutting 25 basis points in December, and the 44.3 percent chance for interest rates remains unchanged, according to the CME Fedwatch," he said in a statement, quoted Wednesday, November 20.

Ibrahim said the focus this week is on consumer inflation data for October, which will be released on Friday, for further signal about Japan's economy.

According to Ibrahim, the reading comes after data on a disappointing gross domestic product from last week, which showed Japan's economic growth slowed down substantially in the third quarter.

Meanwhile, from within the country, economists remind the government to be careful in making regulations related to tax increases by 12 percent because the current global economic condition is not doing well, so it will affect reducing people's purchasing power.

Indeed, the government implemented a tax rate of 12 percent in accordance with the mandate of the law that has been approved by the DPR RI and ratified by the government. However, one of the problems in taxation is the low tax ratio for Indonesia compared to the G20 countries and several countries in ASEAN.

For the initial stage, it is proposed that the implementation of VAT of 12 percent which will be collected in early 2025 be applied to certain sectors that do not directly affect the purchasing power of the wider community.

The choice of electronic, fashion, and automotive products is a fairly wise step because these products are not primary products related to the basic needs of the wider community, according to him, these three types of products are included in the secondary need category, some are even included in the luxury goods or luxury goods.

So that the government targets the upper middle class. However, considering that consumers are in the upper middle class, adaptation and adjustment of consumption patterns will occur so that in the medium term the consumption pattern will return to normal.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Wednesday, November 20, 2024 in the price range of IDR 15,780 - IDR 15,850 per US dollar.