Rupiah Potentially Weakening, Check Sentiment

Illustration (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Monday, February 26, 2024 is expected to weaken again against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Friday, February 23, the rupiah spot exchange rate was closed down 0.05 percent Rp15,585 per US dollar. Meanwhile, Jisdor's rupiah exchange rate closed up 0.26 percent to a price level of Rp15,589 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the prospect of a higher US interest rate for a longer period is a bad sign for the Asian market, as the gap between risk and low risk yields is narrowing.

"This idea makes most regional currencies trade lower this week," he said in a statement quoted Monday, February 26.

The CME Fedwatch tool shows traders are increasingly reducing expectations of lowering the Fed's interest rates in May and June.

From an internal point of view, Bank Indonesia (BI) noted that the Indonesia Payment Balance (NPI) experienced a surplus of 8.6 billion US dollars in the fourth quarter of 2023. The surplus in that period increased significantly at 8.6 billion US dollars compared to the previous quarter's performance which recorded a deficit of 1.5 billion US dollars, thus supporting Indonesia's external resilience.

Meanwhile, the NPI surplus in the fourth quarter of 2024 was supported by an increasing surplus of capital and financial transactions and a low current account deficit.

If detailed, transactions will run in the fourth quarter of 2024 recording a dreficit of USD 1.3 billion, slightly increasing compared to a deficit of USD 1.0 billion.

On the one hand, the trade balance surplus in goods increases, which is supported by an increase in exports of goods in line with global demand improvements and commodity prices.

In addition, the balance of services and the primary revenue balance recorded a higher deficit, in line with the increase in domestic activity and the pattern of interest payments in the reporting period.

Meanwhile, capital and financial transactions recorded significant improvements, from a deficit of 0.1 billion US dollars in the third quarter of 2023 to a surplus of 9.8 billion US dollars in the fourth quarter of 2023.

This positive performance is mainly supported by the flow of portfolio investments that have re-entered the domestic financial market in line with the uncertainty of the global financial market that has begun to subside.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading Monday, February 26 in the price range of Rp. 15,580- Rp. 15,650 per US dollar.