Rupiah Projected Weakening Due To Market Waiting For US Inflation Data

Illustration (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate on Friday, December 1, 2023, is expected to weaken due to market concerns regarding US inflation from PCE price index data for October.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, November 30, the rupiah spot exchange rate fell 0.75 percent to Rp15,510 per US dollar.

Meanwhile, Jisdor's rupiah exchange fell 0.64 percent daily to a price level of IDR 15,484 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said, Fed Officials said the recent decline in inflation and signs of weakening the labor market, suggesting the central bank would likely not raise interest rates further.

"Further easing of inflation can also encourage the bank to lower interest rates this year," he explained in his official statement Friday, December 1.

According to Ibrahim, the market is now awaiting further signal regarding US inflation from PCE price index data for October, which will be released today.

This figure is a measure of Fed's choice of inflation, and is likely to be a factor in the bank's attitude towards interest rates in the coming months.

In addition, the market is also waiting for the reading data of the two US gross domestic product (GDP) in the third quarter of 2023 to also be released today, while PMI figures for November, as well as Fed Chair Jerome Powell's speech, will be released on Friday.

Then, the release of the purchase manager index data showed a continuous decline in manufacturing activities, as China's biggest economic engine struggled to deal with worsening foreign demand.

This figure highlights the continued weakening of China's economy, as post-COVID recovery failed to materialize.

Ibrahim said that Jokowi's anxiety and anxiety regarding the unstable global economic and geopolitical situation has made market participants nervous again.

Inflation and high interest rates in the United States (US), China, whose economy is slowing down and experiencing a property crisis, as well as increasing geopolitical tensions such as the Ukraine vs Russia War, and most recently, the conflict between Israel and Hamas forces in Gaza.

Even so, Jokowi is still grateful for Indonesia's stable economic growth in the midst of conditions like this.

For information, Indonesia's economic growth in the third quarter of 2023 was recorded at 4.94 percent.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Friday, December 1 in the price range of Rp15,500- Rp15,570 per US dollar.