Ahead Of The Release Of Inflationary Data, The Rupiah Has The Potential To Continue Weakening

Illustration (Photo: Doc. ANTARA)

JAKARTA - The rupiah exchange rate in Friday, March 1, 2024, is expected to weaken again against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, February 29, the rupiah spot exchange rate was closed down 0.27 percent Rp15,715 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) of Bank Indonesia (BI) closed lower by 0.17 percent to a price level of Rp15,719 per US dollar.

Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi said that the current focus is on the PCE price index data for the Fed's choice of inflation, which will be released today.

The figure is expected to reaffirm that US inflation will remain stable in January, especially following a higher consumer inflation rate than expected in the month.

Ibrahim said the figure also came after Fed officials John Williams and Raphael Bostic said the central bank needed to make more efforts to achieve inflation in order to meet the bank's target of 2 percent.

"Their comments, which come after a series of similar warnings from other officials, add to doubts over expectations that the Fed will start cutting interest rates in early 2024," he said in a statement quoted Friday, March 1.

From an internal perspective, inflation in February 2024 is expected to increase, both on an annual basis and compared to the previous month.

Inflation in February 2024 is expected to reach 0.24 percent on a monthly basis or onth to month (mtm) or 2.62 percent on an annual basis or year on year (yoy), an increase from the previous month which was recorded at 0.04 percent (mtm) or 2.57 percent (yoy).

Inflation in that period will be driven by inflation in the core component and volatile prices (volatile food).

Core inflation is expected to reach 1.7 percent (yoy), an increase from the previous month of 1.68 percent (yoy).

Meanwhile, volatile price inflation will be influenced by rising food prices for basic necessities, including rising rice prices of 3.8 percent (mtm), red chilies 11.3 percent (mtm), eggs 1.7 percent (mtm), chicken meat 0.7 percent (mtm), and cooking oil 0.6 percent (mtm).

While some food commodities, especially rice, are still influenced by the El Nino phenomenon, which reduces domestic food supply during the late period leading up to the harvest season.

In addition, according to him, import policies are also somewhat hampered by several other rice producing countries that impose restrictions on food exports.

Extreme weather also interferes with food distribution routes.

On the other hand, core inflation, which tends to be stable until February 2024, indicates that inflation expectations are rooted with the current rate of Bank Indonesia's benchmark interest rate. However, general inflation at the end of 2024 is estimated to be around 3.0 percent-3.5 percent (yoy).

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading on March 1 in the price range of IDR 15,700-IDR 15,750 per US dollar.