US Inflation Data Wait Market, Rupiah Potentially Weakens Again

Rupiah Dollar (Photo: intermediate)

JAKARTA - The rupiah exchange rate in trading Tuesday, May 28, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday, May 27, 2024, the rupiah spot exchange rate closed down 0.48 percent to the level of Rp. 16,071 per US dollar. Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.42 percent to a price level of Rp. 16,064 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the market was waiting for further signs regarding the US interest rate from the main inflation data released this week.

In addition, market holidays in the UK and the US limit trade volume, as well as a lack of direct guidance.

"This week's focus is on PCE price index data for the Fed's preferred inflation gauge which will be released on Friday. The size of the Federal Reserve's preferred inflation is expected to be stable from month to month," he explained in his official statement, quoted Tuesday, May 28.

Ibrahim said the greenback had seen an increase in strength in recent sessions as traders continued to ignore the expectations of this year's Fed's drop in interest rates.

In addition, traders are now considering greater opportunities that the Fed will keep interest rates stable even in September, according to the CME Fedwatch tool.

Ibrahim conveyed that the prospect of a high interest rate for a longer period of time is a good sign for the dollar and bad for Asian currencies rich in risk.

From an internal perspective, Bank Indonesia is optimistic that the issuance of Government Regulation Number 22 of 2024 will be able to encourage deposits from Natural Resources Export Result Foreign Exchange (DHE SDA). Where the regulation is the result of collaboration between the government and BI, which will encourage the placement of DHE SDA, increase it, and support economic stability, but also the stability of the rupiah exchange rate.

Meanwhile, the additional incentives provided by the government do not only apply to exporter deposits but also other instruments such as TD Valas DHE. And through the clearing mechanism, tax incentives will also be lighter for exporters who place their exported dollars in the domestic financial system.

Meanwhile, the position of TD Valas DHE since January 2024 has stabilized. The existence of the new regulation further makes DHE deposits increase. around 1.8 billion US dollars 1.9 billion US dollars. Meanwhile, incentives for exporters are regulated in Article 4 of Government Regulation Number 22 of 2024.

Based on Article 4 Paragraph (2), the regulation states that the incentives provided by the government for exporters hang place DHE SDA in the country both in the form of foreign currency and rupiah, namely Final PPh TD Valas DHE and Final PPh TD Valas DHE Rupiah Conversion.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, May 28, 2024, in the price range of IDR 16,060 - IDR 16,120 per US dollar.