US Inflation Begins To Decrease, Rupiah Potentially Strengthens

Rupiah (photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Monday, May 20, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Friday, May 17, 2024, the rupiah spot exchange rate closed down 0.20 percent to the level of Rp15,955 per US dollar. Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.21 percent to a price level of Rp15,978 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the dollar recovery occurred when several Fed officials said they needed more confidence that inflation would decline, in addition to some inflation easing in April.

"This makes traders reduce the stakes on lower interest rates in September, although few, according to the CME Fedwatch tool," he explained in his official statement, quoted Monday, May 20.

Ibrahim said the dollar was expected to weaken by around 0.7 percent this week, following some of the consumer price index data that was weaker than expected for April.

According to him, this figure, coupled with weak retail sales data, raises hopes that inflation will subside in the coming months.

From an internal point of view, Indonesian exports have continued to slow down in recent years. In April 2024, for example, it fell 12.97 percent on a monthly basis to 19.62 billion US dollars..

Ibrahim said the slowdown was caused by various factors, including a decline in economic growth in trading partner countries and a decline in commodity prices.

According to Ibrahim in facing these challenges, the government needs to find new business partners, especially in Asia, especially Southeast Asia and the Middle East.

"This region still has better growth prospects compared to developed countries such as Europe, the United States, and China," he said.

In addition, Ibrahim conveyed the potential of the plantation sector and its derivative products as opportunities for further development in an effort to increase exports.

"Thus, it is important for Indonesia to explore new markets and take advantage of the potential of sectors that have bright prospects to support sustainable economic growth," he explained.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Monday, May 20, 2024 in the price range of IDR 15,900 - IDR 15,990 per US dollar.