US Inflation Data Wait Market, Rupiah Potentially Strengthens

Rupiah Dollar (Photo: antara)

JAKARTA - The rupiah exchange rate in trading Wednesday, June 26, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, June 25, 2024, the rupiah exchange rate on the spot market closed up 0.12 percent at the level of Rp. 16,375 per US dollar. Similarly, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.31 percent to a price level of Rp. 16,379 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said Although the inflation data in May was quite encouraging, the data still shows that price pressure is still relatively high.

"The strong purchase manager's index in June also sparked concerns that US economic power will keep interest rates high for a longer period of time," he said in a statement, quoted Wednesday, June 26.

Ibrahim said the focus this week is on PCE price index data, which is a measure of the Federal Reserve's choice of inflation. The data will be released on Friday and is expected to show inflation is slightly easing but remains well above the central bank's annual target of 2 percent.

From an internal perspective, Ibrahim said that the World Bank (World Bank) estimates that Indonesia's economic growth will be stable next year and in the years to come. This projection is driven by increased public spending, increased business investment, and stable consumer demand. Meanwhile, Indonesia's gross domestic product (GDP) growth is expected to reach an average of 5.1 percent per year from 2024 to 2026.

Meanwhile, average growth is expected to be achieved despite the challenges of easing commodity prices, increasing food and energy price volatility, and increasing geopolitical uncertainty.

"The success of Indonesia's economic performance is mostly thanks to the strong macroeconomic policy framework of the government which helps attract investment," he said.

The increase in food prices has boosted inflation today. Inflation reached 2.8 percent in May 2024, up from 2.6 percent in January 2024. Bad climate conditions reduce domestic rice harvests and affect food prices widely.

The World Bank estimates that BI will start lowering interest rates next year. Meanwhile, the government is increasing social spending and public investment while revenue is decreasing due to the easing of commodity prices.

In April 2024, Bank Indonesia (BI) raised the benchmark interest rate to 6.25 percent. The increase in interest rates occurred when central banks in developed countries postponed the decline in policy interest rates, triggering the exit of portfolios and outflows of investment and causing currency pressure in Indonesia and other developing countries.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Wednesday, June 26, 2024, in the price range of IDR 16,320 - IDR 16,400 per US dollar.