The Rupiah Is Predicted To Weaken Due To The Decreased Expetition Of The US Interest Rate Decrease

JAKARTA - The rupiah exchange rate in trading Tuesday, November 26, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday, November 25, 2024, the rupiah exchange rate on the spot market closed down 0.38 percent at the level of Rp. 15,930 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.52 percent to a price level of Rp. 15,942 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said market participants reduced their stakes to cut interest rates by a quarter of a point from the Federal Reserve in December to 52 percent, compared to 72 percent a month ago, according to the CME Fedwatch.

"The personal consumption expenditure index (PCE), the size of the inflation Fed likes, is scheduled to be released on Friday, and is expected to provide more clues about interest rates," he said in his statement, quoted Tuesday, November 26.

In addition, Ibrahim said Bessent's candidacy as Finance Minister weighed on the dollar, amid some bets that he would be a moderate voice in the Trump administration.

However, the dollar setback could be temporary, considering Bessent openly supports a strong dollar and also supports trade rates.

"The dollar is expected to remain supported by Trump's policy, which is seen as inflation, and is likely to generate higher interest rates for a longer period of time in the US over the coming years," he explained.

Meanwhile, from within the country, the Indonesia Payment Balance (NPI) in the third quarter of 2024 recorded a surplus of 5.9 billion US dollars, of which previously experienced a deficit of 0.6 billion US dollars in the second quarter of 2024.

The surplus was triggered by improvements to a number of indicators, one of which was a decrease in the current account deficit to 2.2 billion US dollars or 0.6 percent of GDP, better than the deficit of 3.2 billion US dollars in the second quarter of 2024.

Indonesia's external resilience stability is currently maintained amidst various global risk dynamics that are currently happening, one of which is shown by the surplus achievement in Indonesia's international economic transaction balance.

The NPI surplus was also triggered by an increase in the surplus of Capital and Financial Transactions to US$6.6 billion or 1.8 percent of GDP from the previous US$3.0 billion or 0.9 percent of GDP in the second quarter of 2024.

This positive development was influenced by an increase in direct investment surplus to 5.2 billion US dollars, driven by high foreign equity participation in the form of equity, especially in the manufacturing, mining and quarrying industry, as well as large and retail trade.

The achievement of the NPI surplus also affected the position of Indonesia's foreign exchange reserves. Foreign exchange reserves have increased to US$149.9 billion at the end of September 2024, or equivalent to financing 6.4 months of imports and payment of government foreign debt, and are above the international adequacy standard of about 3 months of imports.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Tuesday, November 26, 2024, in the price range of IDR 15,820 - IDR 15,910 per US dollar.