The Rupiah Is Predicted To Weaken Again Driven By US Inflation Data

Illustration (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in Monday's trading January 15, 2024 is expected to fluctuate again but closed lower against the United States (US) dollar driven by US inflation data.

Quoting Bloomberg, the Rupiah exchange rate on Friday, January 12, the rupiah spot exchange rate fell slightly 0.01 percent to Rp15,550 per US dollar.

Meanwhile, Jisdor's rupiah exchange rate closed slightly down 0.01 percent to a price level of Rp15,559 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the US CPI inflation grew slightly larger than expected in December, coupled with recent signs of labor market resilience, providing a smaller boost for the Fed to start cutting interest rates early.

However, traders appear to have raised their stakes that the Fed will start lowering interest rates as early as March, at least according to the CME Fedwatch.

The tool shows traders estimate a 70.2 percent chance of cutting 25 basis points by 2024, up from the 64.7 percent chance seen a day ago.

"Corruptions for early interest rate reduction still exist even when some Fed officials reject these expectations, considering inflation remains high and well above the central bank's annual target of 2 percent," he said, quoted Monday, January 15.

In Asia, China's economic data shows some positive developments China's inflation and trade data hint at several signs of recovery in Asia's largest economy in December.

CPI inflation increased slightly from month to month, while exports grew larger than expected.

However, the country is still facing a tough struggle to reach the level of economic activity before COVID-19, as economic recovery largely failed to materialize by 2023, although anti-COVID measures have been lifted.

From an internal point of view, Bank Indonesia (BI) recorded a real sales index or IPR as of December 2023 of 217.9. This figure grew 0.1 percent year on year (yoy).

Meanwhile, retail sales performance in December 2023 is expected to remain strong.

On a monthly basis, retail sales are also predicted to increase, with a growth of 4.8 percent (month to month/mtm).

Meanwhile, the performance of all groups is predicted to increase, especially in the information and communication equipment group, the clothing subgroup, as well as the food, beverage, and tobacco group.

"This is in line with the celebration of Christmas National Religious Holidays and New Year's holidays which increase domestic demand, as well as price discount strategies from retailers," he explained.

Meanwhile, in November 2023, IPR was recorded to remain strong at 207.9.

This figure on an annual basis grew by 2.1 percent yoy.

On a monthly basis, retail sales continued to grow by 0.2 percent mtm, mainly supported by the increase in the growth of spare parts and accessories and clothing subgroups.

Meanwhile, in terms of prices, the general price expectation index (IEH) in February and May 2024 was 129.3 and 132.4. This figure is lower than the previous month's IEH which was 133.1 and 137.8, respectively.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Monday, January 15 in the price range of IDR 15,530- IDR 15,590 per US dollar.