The Rupiah Is Predicted To Be Sluggish Ahead Of The Release Of US Inflation Data

Illustration of Rupiah (photo: dock. Antara)

JAKARTA - The rupiah exchange rate on Wednesday 13 December 2023 is expected to weaken again ahead of the release of US inflation data.

Quoting Bloomberg, on the Rupiah exchange rate on Tuesday 12 December, the spot rupiah exchange rate strengthened slightly by 0.01 percent to IDR 15,621 per US dollar. Meanwhile, the Jisdor rupiah exchange rate closed down 0.11 percent to a price level of IDR 15,631 per US dollar.

Director of PT. Profit Forexindo Berjangka, Ibrahim Assuaibi, said that the dollar index fell slightly in trading last Tuesday. But the greenback held above the 104 level against a number of other currencies, ahead of key US inflation data and uncertainty over the Fed's plan to lower interest rates in 2024 pushing funds into the dollar.

"Markets are now focused on the US consumer price index (CPI) inflation data, which will be released on Tuesday. Although the figures are expected to show that inflation eased slightly in November, they are still expected to be well above the Fed's annual target of 2 percent, "He explained in his official statement Wednesday, December 13.

Ibrahim said that following the inflation data, the Fed would decide on interest rates for the final time this year on Wednesday. The Fed is expected to keep interest rates on hold, but any signals from the central bank regarding the path of interest rates in 2024 will be closely watched.

So far, the Fed is still maintaining its rhetoric that interest rates will remain high for a longer period of time. But recent signs of a slowdown in the US economy have fueled some speculation about an earlier rate cut next year.

Domestically, Bank Indonesia (BI) estimates that retail sales performance in November 2023 will increase, as reflected in the November real sales index (IPR) of 209.4 or growth of 2.9 percent year on year (yoy).

The increase in retail sales performance was driven by other household equipment groups, clothing subgroups, as well as food, beverages, and tobacco groups.

Ibrahim explained that on a monthly basis, retail sales are estimated to grow 0.9 percent month to month (mtm) driven by an increase in other household equipment groups as well as spare parts and accessories groups.

Meanwhile, several groups continued to grow positively even though it slowed down, including the information and communication equipment group and the food, beverage, and tobacco group due to unfavorable weather.

In October 2023, the IPR was recorded at 207.5 or an annual growth of 2.4 percent (yoy). The increase in retail sales performance was driven by other household equipment groups as well as the food, beverage, and tobacco groups which grew higher compared to the previous month.

The increase in retail sales performance mainly occurred in the information and communication equipment group, the food, beverage, and tobacco group, as well as the motor vehicle fuel group, driven by domestic demand, preparations for National Religious Holidays (HBKN) Christmas, end of year holidays, and the smooth running of distribution.

In terms of prices, the general price expectation index (IEH) for January and April 2024 was 133.1 and 137.8 respectively, higher than the previous month's IEH which was 131.2 and 133.0 respectively.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Wednesday, December 13 in the price range of IDR 15,600- IDR 15,660 per US dollar.