Only 3 Trade Days Left, Rupiah Potentially Strengthens Towards The End Of The Year

Illustration (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate on Wednesday, December 27, 2023 is expected to move again higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Friday, December 22, the rupiah spot exchange rate rose 0.26 percent to Rp15,484 per US dollar. Meanwhile, Jisdor's rupiah exchange rate closed up 0.28 percent to a price level of Rp15,489 per US dollar.

Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi said the dollar was at its lowest point in four months with a focus on inflation PCE's dollar index and a slightly futures dollar index moving in Asian trade on Friday after sinking to its weakest level since early August.

"A little downward revision of the third-quarter US GDP makes traders more optimistic about lower interest rates by 2024, although this figure still reflects strong growth in the US economy," he said in his official statement.

The current focus is on PCE price index data which is expected to show a persistent US inflation stiffness of a scenario that gives the Fed more push to keep interest rates higher over the longer term.

US inflation is still in a trend well above the Fed's annual target of 2 percent, with signs of greater stiffness suggesting that the Fed will take underdovish steps by 2024.

Such a scenario could trigger a setback in Asian currencies, which have so far seen a strong rise by 2024. December.

The market is still preparing to lower interest rates by 25 basis points in March 2024, according to Fed Fund futures.

From an internal point of view, Indonesian President Joko Widodo (Jokowi) expressed optimism for the 2024 Indonesian economic outlook.

According to him, Indonesia has economic and political capital. Entering 2024, we have no reason not to be optimistic.

There are several indicators of Indonesia's economy that make economic growth optimistic above 5 percent.

For example, economic growth is still in the range of 5 percent or higher than the global average of only 2.9 percent. Then, inflation is still at 2.86 percent or still carried by the global inflation rate of 7.2 percent.

In addition, several other indicators are the reasons behind the government's optimism, such as the increase in the level of national employment absorption, namely 4.5 million people from August 2022 to August 2023, manufacturing PMI at the expansive level of 51.7, trade balance surplus 43 consecutive months, and the November 2023 Consumer Confidence Index at 123.6.

Ibrahim estimates that the rupiah will fluctuate but close higher on Wednesday, December 27 trading in the price range of IDR 15,460- IDR 15,560 per US dollar.