US Inflation Prediction Market Drops, Rupiah Potentially Strengthens To Rp16,280

Illustration (Photo: Doc Antara)

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

Quoting Bloomberg, the Rupiah exchange rate on Wednesday, July 10, 2024, the rupiah exchange rate on the spot market closed higher by 0.06 percent at the level of Rp. 16,240 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.15 percent to a price level of Rp. 16,256 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi commented on Federal Reserve Chairman Jerome Powell sparking speculation over when the central bank will start cutting interest rates, following a slowdown in the labor market and progress in reducing inflation.

However, the Fed chairman reiterated the central bank's commitment to the 2 percent inflation target, and did not provide direct instructions on when the Fed would start lowering interest rates.

While most traders kept their stakes on lower interest rates in September, Powell's testimony prompted increased caution ahead of the main consumer price index inflation data.

"This figure is expected to show inflation is decreasing in June, although few. Dollars found power after Powell's testimony", he said in his statement, quoted Thursday, July 11.

From an internal point of view, Bank Indonesia (BI) reported that in June 2024 retail sales performance is predicted to increase both on an annual basis and on a monthly basis.

This is reflected in the Real Sales Index (IPR) in June 2024 which was recorded at 232.8 or an annual growth of 4.4 percent year on year (yoy), an increase from 2.1 percent yoy in April 2024.

The increase in retail sales was driven by the Other Household Equipment Group by 0.8 percent yoy, Subgroup Sandang 5.6 percent yoy, and Food, Beverage and Tobacco Groups 5.1 percent yoy.

The Cultural Goods and Recreation Group contracted -5.9 percent yoy as well as Information and Communication Equipment -4.3 percent yoy recorded improvements even though it was still in the contraction phase.

On a monthly basis, retail sales performance in June 2024 is predicted to increase with growth of 2.1 percent month to month (mtm), after contracting 3.5 percent mtm in the previous period.

Several groups recorded an increase and again experienced expansion, especially in Subgroups of Sandang 2.8 percent mtm, Cultural Goods and Recreation Groups 7.1 percent mtm, as well as Food, Drinks, and Tobacco 2.7 percent mtm.

Meanwhile, in the second quarter of 2024, retail sales performance is predicted to continue to grow. The Real Sales Index in the second quarter of 2024 is predicted to grow by 1.3 percent yoy, although it is not as high as the growth in the previous quarter which was 5.6 percent yoy.

Meanwhile, respondents predict sales will increase in August and November 2024.

The Sales Expectation Index (IEP) in August and November 2024 were recorded at 158.8 and 146.1, respectively, higher than 137.2 and 143.7 in the previous period.

Ibrahim estimates that the rupiah will fluctuate, but close higher in trading Thursday, July 11, 2024, in the price range of IDR 16,190-IDR 16,280 per US dollar.