The Rupiah Is Predicted To Be Strong Amid The Weakening Of The US Economy

Rupiah exchange rate (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, June 7, 2024 is expected to move again higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, June 6, 2024, the rupiah spot exchange rate closed higher by 0.15 percent to the level of Rp. 16,263 per US dollar. Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.02 percent to a price level of Rp. 16,279 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi conveyed that the weak labor data of ADP showed a further decline in the labor market.

"The data comes after data on weak job vacancies, and also opens up the possibility for weak nonfarm payroll data on Friday," he explained in his official statement, quoted Friday, June 7.

Ibrahim said other economic indicators also show a slowdown in the country with the largest economy in the world, which could provide a weaker inflation outlook and give the Fed greater confidence to start lowering interest rates.

According to Ibrahim, nearly two-thirds of economists now expect the Fed to lower interest rates in September. However, the possibility of lowering interest rates has the potential to be weakened by US service sector activities, which accounted for much of the US economic output, which returned to growth in May after contracting in April.

Meanwhile, investors are now looking forward to a meeting of the European Central Bank (ECB) on Thursday, where the bank is expected to lower its deposit interest rate from a record high of 4 percent.

From an internal point of view, Ibrahim conveyed that in order to encourage a fiscal deficit to decrease, the government in the future will merge the Directorate General of Taxes and Directorate General of Customs and Excise into the State Revenue Authority (BOPN) in accordance with the Prabowo-Gibran campaign program during the 2024 presidential election debate.

"The purpose of the merger of the Directorate General is to reduce the deficit so that in his government, the debt will not become more mounting," he explained.

Meanwhile, the potential for state revenue is still very large up to IDR 500 trillion, but not from increasing the burden on the community by increasing tax rates. One of them, the main revenue from taxes can still be netted by reducing the space for shadow economy/shadow economy, taking into account, from the position of Indonesia's 2023 gross domestic product (GDP) at the level of IDR 20,892 trillion, as much as 60 percent or around IDR 12,000 trillion is household consumption.

Household consumption recorded in state revenue from the Value Added Tax component and Sales Tax on Luxury Goods (PPN/PPnBM) in 2023, is only worth IDR 737.64 trillion.

Moreover, the government needs to encourage State-Owned Enterprises (BUMN) to generate more revenue for the country, from IDR 10,000 trillion total assets belonging to BUMN, the state-owned company only contributes a little to state revenue.

Seeing the non-tax state revenue (PNBP) from BUMN, it was recorded that it was only IDR 82.06 trillion. He also encouraged the government to maximize the assets belonging to BUMN to raise state revenues. For this reason, with the existence of BPN that separates the Directorate General of Taxes and the Directorate General of Customs from the Ministry of Finance can design these things.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, June 7, 2024 in the price range of Rp. 16,220 - Rp. 16,290 per US dollar.