JAKARTA - The rupiah exchange rate in trading Friday, May 17, 2024 is expected to move higher against the United States (US) dollar.
Quoting Bloomberg, the Rupiah exchange rate on Thursday, May 16, 2024, the rupiah spot exchange rate closed higher by 0.65 percent to the level of Rp15,924 per US dollar. Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.78 percent to a price level of Rp15,944 per US dollar.
Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi conveyed that the inflation of the US consumer and CPI core price index is lower than expected for April. This brings back opportunities for the Fed's interest rate cuts in the future.
"The data, which is also followed by retail sales data that are weaker than expected, raises expectations that inflation will decline in the coming months, giving the Fed greater confidence to start cutting interest rates," he explained in his official statement, quoted Friday, May 17.
According to the CME Fedwatch tool, this has led traders to increase their expectations of lowering interest rates by 25 basis points in September, which is likely to increase to nearly 54 percent from 49 percent last week.
However, the CPI figure is still well above the Fed's annual target of 2 percent, while a number of Fed officials have also warned over the past week that the central bank needs to be more convinced that inflation is going down.
From an internal point of view, Bank Indonesia (BI) noted that Indonesia's Foreign Debt (ULN) in the first quarter of 2024 decreased. Indonesia's external debt position in the first quarter of 2024 was recorded at 403.9 billion US dollars or equivalent to Rp. 6,489 trillion (assuming an exchange rate of Rp. 16,070 per US dollar), down compared to the position of external debt in the fourth quarter of 2023 which amounted to 408.5 billion US dollars or Rp. 6,563 trillion.
This decline in the position of foreign debt comes from public and private sector external debt. With this development, Indonesia's external debt on an annual basis experienced a growth contraction of 0.02 percent year on year (yoy), after growing 3.0 percent yoy in the previous quarter.
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The government's external debt also recorded a decline. The government's external debt position in the first quarter of 2024 was recorded at 192.2 billion US dollars or Rp. 3,088 trillion, down from the previous quarter's position of 196.6 billion US dollars or Rp. 3,158 trillion. On an annual basis, government external debt contracted by 0.9 percent yoy, after growing 5.4 percent yoy in the previous quarter.
The government is committed to maintaining credibility by fulfilling the obligations of principal payments and interest on time, as well as managing external debt flexibly and opportunistically in the aspects of timing, tenor, currency, and instruments to obtain the most efficient and optimal financing.
As one of the components in the State Budget financing instrument, the utilization of external debt continues to be directed to support the financing of the productive sector and government priority spending, which mainly includes the Health Services and Social Activities sector at 21.1 percent of the total government external debt.
Ibrahim estimates that the rupiah will fluctuate but close higher on trading Friday, May 17, 2024, in the price range of IDR 15,860 - IDR 15,950 per US dollar.
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