Rupiah Is Expected To Weaken Due To Doubts By Market Players

Illustration of Rupiah (photo: dock. Antara)

JAKARTA - The rupiah exchange rate on December 8, 2023 is expected to weaken due to the expectations of market participants not sure when the Federal Reserve will start cutting the benchmark interest rate next year.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, December 7, the rupiah spot exchange rate fell 0.14 percent to Rp15,515 per US dollar. Meanwhile, Jisdor's rupiah exchange rate closed lower by 0.20 percent at the price level of Rp15,536 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said that although the Fed is expected to maintain interest rates in December, the market is still not sure when the bank plans to start cutting its interest rates.

"This uncertainty helps the dollar, even when ADP payroll data shows a larger decline in the labor market," he explained in his official statement Friday, December 8.

Ibrahim conveyed that non-farm payroll data released on Friday is expected to provide definite signal regarding the labor market, and will likely be a factor in dollar movement for the remainder of this year.

In addition, Gunernur Bank of Japan (BOJ) Ueda hinted at more challenges for BOJ in the coming months, and also talked about the options the bank has when considering the shift from negative interest rates.

Domestically, the market also continues to monitor the projected growth of Indonesia's economy in 2024 by 4.8 percent. This projection is lower than the government's target of 5.2 percent. This is based on a number of indicators, such as the challenges of the global economy and the decline in leading commodity prices next year.

Therefore, Indonesia's economic growth is lower than the macro assumption listed in the state revenue and expenditure budget or the 2024 State Budget. Even so, growth of 4.8 percent is not a bad thing. This is because world economic growth is predicted to be 2.8 percent next year.

Economic growth of 4.8 percent means the economy will not be recession, even though it is not accelerated. However, the 5.2 percent economic growth target in 2024 can be achieved, even though the government must work hard to support it.

Ibrahim estimates that the rupiah will fluctuate but closed lower in the trading amount on December 8 in the price range of IDR 15,490- IDR 15,550 per US dollar.