Rupiah Potentially Weakens Amid Strengthening US Dollar Index

Illustration (Photo: Doc. ANTARA)

JAKARTA - The rupiah exchange rate in trading Tuesday, June 11, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday, June 10, 2024, the rupiah spot exchange rate closed down 0.54 percent to the level of Rp. 16,283 per US dollar.

Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.44 percent to a price level of IDR 16,290 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the dollar index strengthened on Monday, June 10, continuing a strong increase from last Friday after a strong nonfarm payroll report showed traders sharply reduced expectations of lower interest rates in September.

"The market focuses on the upcoming Fed meeting, with the interest rate decision to be released on Wednesday. The central bank is expected to keep interest rates stable," he explained in his official statement, quoted Tuesday, June 11.

Ibrahim conveyed any signal that future policies would be closely monitored, especially after recent signs of US inflation's resilience and the US labor market.

A number of Fed officials have warned that the central bank will maintain higher interest rates longer in the face of high inflation and labor market power.

Strong nonfarm payroll data on Friday strengthened this idea.

Prior to the Fed's decision on Wednesday, key consumer price index inflation data was also available this week, and is expected to show inflation remains well above the Fed's annual target of 2 percent in May.

From an internal perspective, the government's due debt in 2025 will reach IDR 800.33 trillion.

Although the government's debt matures quite a lot, it often raises questions and concerns, but the debt remains in the corridor safe with several notes.

For example, as long as the country remains credible, perceptions of the state budget are good, as well as economic and political fiscal policies remain stable.

Previously, the Ministry of Finance noted that government debt due in 2025 was IDR 800.33 trillion. This amount consists of State Securities (SBN) maturing IDR 705.5 trillion and loans due IDR 94.83 trillion.

The large government debt maturity was the result of the COVID-19 pandemic.

At that time, Indonesia needed almost Rp1,000 trillion in additional spending.

Meanwhile, state revenues fell 19 percent because the economy had stopped.

Meanwhile, the debt withdrawal, through the burden sharing scheme with Bank Indonesia (BI), so that the BI balance sheet remains good, the fiscal remains credible, the polytk also acceptable using state debt securities with a maximum equity of seven years.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, June 11, 2024, in the price range of IDR 16,270 - IDR 16,330 per US dollar.