The Fed Defends Interest Rates, Rupiah Potentially Continues Strengthening

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, March 22, 2024, is expected to continue strengthening the United States (US) dollar after the Federal Reserve maintains interest rates.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, March 21, the rupiah spot exchange rate closed higher by 0.34 percent Rp15,669 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) of Bank Indonesia (BI) closed up 0.41 percent to a price level of Rp15,662 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the Federal Reserve maintains stable interest rates as expected and policymakers are still projecting a three-time drop in US interest rates this year even as inflation remains high.

"The Fed's updated economic projection shows the personal consumption expenditure price index does not include food and energy increasing by 2.6 percent by the end of the year, compared to 2.4 percent in projections issued by the US central bank in December," he said, quoted Friday, March 22.

Ibrahim conveyed that this new policy view also increases the outlook for the US economy. Policymakers are now estimating a growth of 2.1 percent this year compared to the 1.4 percent projected in December.

Meanwhile, the unemployment rate is estimated to end in 2024 at 4 percent, compared to the 4.1 percent estimated at the end of last year.

Fed chairman Jerome Powell said that even with the unexpected power in recent consumer price data, his view was that inflation would move down gradually and be on a rather bumpy track.

But major central banks are taking most of the same steps as they plan to lower interest rates to spur growth as the economy slows down and inflation continues to slow down.

In addition, European Central Bank President Christine Lagarde said earlier on Wednesday that the ECB would continue to rely on data and would not commit to a predetermined drop in interest rates even after the central bank began loosening its monetary policy.

From an internal point of view, the General Election Commission (KPU) of the Republic of Indonesia has announced the results of the recapitulation of the 2024 General Election (Pemilu) vote. The announcement of the determination was made at the Plenary Meeting on the Determination of the Recapitulation of the Results of the National Election Calculation of the 2024 General Election.

Based on this determination, it is known that the pair of Presidential-Vice Presidential Candidates (Cawapres) RI number 2 Prabowo Subianto-Gibran Rakabuming Raka, won the most votes in the 2024 presidential election. The number of valid votes nationally was 164,227,475 as stated in the D model form of PPWP National Results.

The number of valid votes for the presidential and vice presidential pairs number 1, H Anies Baswedan and Dr Muhaimin Iskandar as many as 40,971,906 votes.

Meanwhile, the number of valid votes for the presidential and vice presidential candidate pair number 2, Prabowo Subianto-Gibran Rakabuming Raka as many as 96,214,691 votes.

Then the number of valid votes for the presidential and vice presidential candidates number 3 Ganjar Pranowo and Prof Mahfud MD was 27,040,878 votes.

In addition, when the determination of the results of the 2024 General Election was announced. Outside the KPU building there was a demonstration carried out by the candidate pair one and candidate pair three but the mass demonstration was in a conducive condition and there was no riot, so this conducive condition made the market respond positively so that the Garuda currency strengthened.

Ibrahim estimates that the rupiah will fluctuate but close higher on Friday, March 22 trading in the price range of IDR 15,630 - IDR 15,680 per US dollar.