Ahead Of The Weekend, Rupiah Is Predicted To Weaken Due To External Sentiment

JAKARTA - The rupiah exchange rate in trading Friday, January 3, 2025 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, on Thursday, January 2, 2025, the rupiah spot exchange rate closed down 0.41 percent to the level of Rp. 16,198 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.49 percent to a price level of Rp. 16,236 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said Donald Trump had promised to impose additional rates on China, which is expected to trigger a potential US-China trade war this year after Trump took office later this month.

"In addition, the Federal Reserve meeting in December signaled less cuts in 2025 as inflation remains a major concern, which further dampens Asian market prospects," he said in a statement, quoted Friday, January 3.

Ibrahim said China's manufacturing activity experienced weaker growth than anticipated in December, according to private purchase manager index (PMI) data released on Thursday, which showed that the impact of recent stimulus measures faded.

"PMI Caixin's results followed government data earlier this week, which also indicated that the manufacturing sector was developing in December but at speeds below expectations," he explained.

Meanwhile, from within the country, Indonesia's manufacturing Purchasing Manager Index (PMI) is back to expansion after being in the contraction zone for 5 consecutive months.

Based on the latest S&P Global report, Indonesia's manufacturing PMI strengthened to the level of 51.2 in December 2024 from previously contracting at 49.6 in November 2024. This manufacturing performance index is the highest since May 2024.

Ibrahim said the increase in PMI was driven by an increase in new production and demand volumes simultaneously and overall, production rose at a moderate level.

However, Ibrahim said, market demand was generally reported to have strengthened, both at home and abroad.

As well as the volume of new export sales increasing, although marginal, for the first time in less than 1 year.

According to Ibrahim, Indonesia's manufacturing economy ended in 2024 with a positive note. The expansion for the first time since the middle of the year shows that sales and output have increased.

Ibrahim said moreover, there is great hope that this positive trend will continue. And many companies are optimistic that production will increase this year, because macroeconomic conditions are stable and client purchasing power improve so that employment and purchasing activities increase.

In addition, the Central Statistics Agency (BPS) announced inflation reached 0.44 percent (month to month/mtm) and 1.57 percent (year on year/yoy) in December 2024. The annual inflation (yoy) recorded in December also became inflation in the current year.

By only recording 1.57 percent inflation, 2024 inflation will be the lowest in Indonesian history. For the record, the lowest inflation that BPS had previously recorded was in 2020, which was 1.68 percent.

Ibrahim said that the low inflation in 2024 was due to a number of factors ranging from weakening purchasing power and slowing the prices of basic foodstuffs after flying in 2022 and 2023.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading Friday, January 3, 2025 in the price range of Rp. 16,180 - Rp. 16,270 per US dollar.