Rupiah End Of Week Potentially Weakening, Here's The Sentiment

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, April 5, 2024, is expected to continue to weaken the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, April 4, 2024, the rupiah spot exchange closed higher by 0.17 percent to the level of Rp15,893 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.10 percent to a price level of Rp15,907 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said Federal Reserve Chairman Jerome Powell gave various signals regarding the decline in US interest rates. Although Powell said the Fed would eventually cut interest rates by the end of this year, he provided little hint of the time and scale of the cut potential.

"Powell also said the central bank would require more confidence that inflation is moving towards an annual target of 2 percent. Powell's comments come just before the main data for nonfarm payroll for March, which will be released on Friday," he explained in his official statement, quoted Friday, April 5.

But the main event this week is nonfarm payroll data for March, which will be released on Friday. The stagnant inflation and the strong labor market are the Fed's two biggest considerations in the potential to lower interest rates.

Prior to labor data, the focus was also on the speech of members of the Fed's other interest rate-set committee. FOMC members Michelle total and Thomas Barkin will be speaking at separate events on Thursday.

In addition, a number of top Japanese officials have warned the market of speculation against yen, and that they will not rule out any action to field the USDJPY pair. Violations against 152 have attracted high-level interventions by the Japanese government in 2022.

From an internal point of view, the position of Indonesia's foreign exchange reserves in March 2024 is expected to be shrinking. This continued the decline in foreign exchange reserves in February 2024. Foreign exchange reserves in March 2024 are estimated to be at the level of 143 billion US dollars. This position came down from foreign exchange reserves in February 2024 which reached 144 billion US dollars.

The decline in foreign exchange reserves was due to the slowing down of Indonesia's main commodity exports, the payment of government foreign debt and in line with the weakening of the rupiah exchange rate which was close to IDR 16,000 per US dollar.

This is because foreign exchange reserves are usually used for market intervention to maintain the supply of dollars and prevent rupiah depreciation. He estimates that the rupiah exchange rate will be in a weakening trend as strong external pressure is still estimated to be persistent until the end of the first semester of 2024.

Meanwhile, for the second semester of 2024, the development of the rupiah exchange rate is estimated to be better, with the expectations of lowering the Fed interest rate which will also be followed by a decrease in demand for the US dollar.

Thus, the position of foreign exchange reserves will be better by the end of the year, or reach 155 billion US dollars. This estimate is better than the position of Indonesia's foreign exchange reserves at the end of December 2023, which was recorded at 146.4 billion US dollars.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading on April 5, 2024, in the price range of IDR 15,880 - IDR 15,930 per US dollar.