Market Focuses on Trade Balance, Rupiah Potentially Continues Weakening

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate on trading Tuesday, March 26 2024 is expected to continue weakening against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday 25 March, the spot rupiah exchange rate closed down 0.11 percent at IDR 15,800 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) Bank Indonesia (BI) rupiah exchange rate closed down 0.13 percent to a price level of IDR 15,795 per US dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi conveyed the sentiment coming from the Fed maintaining interest rates between 5.25 percent-5.5 percent and being stuck in a projection of three cuts at the end of the year.

"However, they also said they would not make cuts until they were sure that inflation would decline sustainably towards the 2 percent target," he said in his statement quoted Tuesday, March 26.

Ibrahim said that around 84 basis points of cuts are expected to occur this year, much lower than around 160 basis points at the start of this year but higher than at the beginning of this week as bets on an interest rate cut strengthen.

From an internal perspective, the market continues to observe the Indonesian Trade Balance Surplus which has continued to show a downward trend in recent times and needs serious attention from the government.

According to Ibrahim, the pattern that should occur is that if the export value is positive, the import value will also be positive. Meanwhile, what is currently happening is the opposite, where the export value is minus 9.4 percent, but the import value has actually increased.

Ibrahim said that what was even more interesting was that when imports increased sharply to 15.8 percent and the value of exports fell, this meant that many consumer goods or products from abroad were entering the country. This will ultimately erode national foreign exchange reserves.

"Even though the government is happy because Indonesia's Trade Balance is still in surplus, the export trend has still weakened in the last year. This is not good and is a threat from the global situation which continues to heat up until now there is no clarity," he explained.

For information, data from the Central Statistics Agency (BPS) shows that the export value in February 2024 was 19.31 billion US dollars, contracting 9.4 percent year on year (yoy). Meanwhile, the import value reached 18.44 billion US dollars, growing 15.8 percent (yoy).

Meanwhile, growth in Indonesia's trade balance surplus was recorded at 2.87 percent as of February 2024, or down 6.41 percent compared to the same period in the previous year which reached 9.28 percent.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Tuesday, March 26 in the price range of IDR 15,780 - IDR 15,850 per US dollar.