The Rupiah Has The Potential To Strengthen Amid The Fed's Interest Rate Cut Expert

Illustration (Photo: Doc. ANTARA)

JAKARTA - The rupiah exchange rate in trading Friday, June 14, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, June 13, 2024, the rupiah spot exchange rate was closed up 0.13 percent to the level of Rp. 16,270 per US dollar.

Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.06 percent to a price level of Rp. 16,286 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said that the central bank now only sees the possibility of one decline in interest rates this year, down from the previous estimate three times.

"Some policymakers even called for no lower interest rates this year due to high inflation," he explained in his official statement, quoted Friday, June 14.

Ibrahim said the Fed also raised inflation forecasts for 2024. However, the Fed's comments were preceded by inflation of the consumer price index which showed that inflation was slightly lower than expected in May.

According to him, the figure hit the dollar and lowered the yield of Treasury, because traders received a narrative of disinfection

However, the dollar stabilized after the Fed's comments, given the higher and longer interest rates are likely to benefit the greenback. Such a scenario is also a bad sign for risk-driven currencies.

The PPI data, which will be released on Thursday, is expected to provide more clues regarding inflation.

In addition, the central bank is likely to keep interest rates stable, but is expected to reduce some of the bond purchases in an effort to tighten policies.

Although tighter monetary conditions are expected to provide support to its currency.

From an internal point of view, the statements of economists are different from the statements of the Minister of Finance Sri Mulyani who revealed that the world's economic projection is expected to remain gloomy until next year.

Ibrahim said there are at least six major challenges that the world must face in the future, namely high interest rates, increasingly stringent trade restrictions, commodity price volatility, geopolitical tensions, starting to age the world's population, to the bad effects of climate change.

There are challenges that are economic in nature, such as inflation. The surge in inflation in several countries, especially developed countries, was responded to by the increase in the benchmark interest rate.

Now the position of the benchmark interest rate is at a high level for a long time because inflation has not subsided.

In addition, from within the country, economic conditions began to experience similar challenges. The rupiah exchange rate and the current high interest rate make the Indonesian economy in threat.

If this condition continues, various bad impacts can hit Indonesia, ranging from the threat of termination of employment (PHK) to weaken purchasing power.

The current economic data is sufficient to provide anxiety for various parties. Likewise, the price of goods continues to increase in the midst of people's purchasing power which is not in its best form.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, June 14, 2024, in the price range of IDR 16,230 - IDR 16,310 per US dollar.

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