Rupiah Potentially Weakens Due To Global Geopolitical Conflict

JAKARTA - The rupiah exchange rate in trading Tuesday, December 10, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday, December 9, 2024, the rupiah exchange rate on the spot market closed lower by 0.14 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 down 0.08 percent to a price level of Rp. 15,861 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi conveyed the increasing geopolitical tension after rebel forces took over the Syrian capital, Damascus, and toppled President Bashar al-Assad, who fled to Russia.

"Compared by increased uncertainty over US interest rates, traders prefer the dollar and government bonds," he said in a statement, quoted on Tuesday, December 10.

In addition, Ibrahim said the market was waiting to see what would happen after regime changes after a prolonged civil war.

Ibrahim said rebel forces were partly supported by Turkey and had ties to the Sunni Islamic sect, which left them at odds with Iran. Other reports say Israel has also entered Syrian territory.

According to Ibrahim, the market mostly maintains the bet that the Federal Reserve will cut interest rates by 25 basis points next week.

However, the central bank's long-term prospects for interest rates are changing uncertainly, with high inflation and economic resilience that is likely to trigger slower easing by 2025.

Meanwhile, from within the country, Bank Indonesia reported, the Consumer Confidence Index (IKK) in November 2024 experienced an increase of 4.8 points to 125.9 points. This achievement is lower than the IKK in the previous month which was perched at the level of 121.1 points.

The increase in consumer confidence in November 2024 was supported by the Current Economic Condition Index (IKE) and the Consumer Expectation Index (IEK) which experienced an increase. IKE and IEK were recorded at 113.5 and 138.3, respectively, higher than the previous month's index which was recorded at 109.9 and 132.4.

Meanwhile, IKE and IEK recorded an increase in all components of their formation. Based on the category of expenditure, consumer confidence in November 2024 was recorded to increase for all categories. The highest increase in IKK was recorded in respondents with expenses above IDR 5 million, reaching 138.1, from the previous month 127.9.

Meanwhile, based on age, IKK also increased in all age groups, with the highest increase in the 51-60 year age group, which increased to 124.9 from the previous month of 112.9. Then, spatially, IKK increased in most cities surveyed, the highest in Padang City at 16.3 points, followed by Palembang 11.5 points, and Ambon 9.8 points.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Tuesday, December 10, 2024, in the price range of IDR 15,850 - IDR 15,920 per US dollar.