Rupiah Projected To Strengthen, External Factors Still Overshadow

JAKARTA - The rupiah exchange rate in trading Wednesday, January 31, 2024 is expected to fluctuate again but closed higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, January 30, the rupiah spot exchange rate was closed at 0.19 percent Rp15,780 per US dollar. Meanwhile, Jisdor's rupiah exchange rate closed up 0.18 percent to a price level of Rp15,796 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said traders had reduced the possibility that the US central bank would lower interest rates in March to 48 percent, from 89 percent last month, according to the FedWatch Tool from the CME Group, as the data reinforces the view that the US economy remains solid.

"The Fed is expected to keep interest rates stable on Wednesday and investors will focus on Fed Chair Jerome Powell's comments, after he indicated in December that the Fed was turning to a cycle of lower interest rates." he said in a statement quoted Wednesday, January 31.

Ibrahim said the US Treasury Department would borrow $760 billion in the first quarter of 2024, the figure was 55 billion US dollars lower than October's forecast.

In addition, Investors are also wary of increasing geopolitical risks after three US military members were killed in a drone strike against US troops in northeastern Jordan near the Syrian border.

Ibrahim also said in Europe that the European Central Bank on Thursday will maintain interest rates at a record high of 4 percent and reaffirm its commitment to fighting inflation even as the time to start reducing loan costs gets closer.

From an internal point of view, the Minister of Finance (Menkeu) Sri Mulyani Indrawati agrees with the government and economists, that Indonesia's economic growth is optimistic that it will be able to touch 5 percent on an annual basis or year on year (yoy) in 2023. Even though it is in an uncertain global atmosphere and tends to slow down, Indonesia's economy will continue to survive well, aka resilient. Mainly, domestic demand is the support and as a substitute for external weakness.

Ibrahim expressed his optimism that the 2023 economic achievement is projected to continue from economic growth which reached 5.05 percent year to date (ytd) in the third quarter of 2023, supported by consumption and investment.

As for public consumption activities that are still strong, supported by a relatively controlled inflation rate as well as a decrease in the unemployment rate and the role of the state budget, it has actively become a shock absorber to maintain people's purchasing power throughout 2023.