Joe Biden Withdraws from US Presidential Election, Rupiah Potentially Weakens Amid Global Uncertainty

Illustration (Photo: Doc Antara)

JAKARTA - The rupiah exchange rate on Thursday, July 25, 2024, is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the rupiah exchange rate on Wednesday, July 24, 2024, the rupiah exchange rate on the spot market closed down 0.01 percent at IDR 16,215 per US dollar.

Meanwhile, the rupiah exchange rate at Bank Indonesia (BI)'s Jakarta Interbank Spot Dollar Rate (Jisdor) closed down 0.12 percent to IDR 16,224 per US dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi said that most traders remain biased towards the greenback amid ongoing uncertainty regarding the 2024 US presidential election.

"Especially after Joe Biden withdrew from the candidacy and supported Kamala Harris as the Democratic Party candidate," he said in his statement, quoted on Thursday, July 25.

The uncertainty regarding the US presidential election also weighed on sentiment towards China, as investors speculated about the impact of changes in the US government on Washington's attitude towards the country.

Ibrahim said that the Chinese market has experienced a prolonged decline in the last few sessions because sentiment towards the country has worsened due to disappointing economic data, especially data showing slower-than-expected growth in the second quarter.

"This is coupled with a disappointing interest rate cut by the People's Bank, while the Third Plenary Session of the Chinese Communist Party also did not provide many clues regarding further stimulus measures," he said.

Internally, the market continues to monitor the condition of the government's debt which is swelling and is already in an unsafe position.

Based on data from the Ministry of Finance, the government's debt position in May 2024 reached IDR 8,353.02 trillion.

The ratio of government debt to revenue has now reached 300 percent. This figure is higher when compared to the position on December 31, 2023, which was 292.6 percent.

The meaning of the debt to revenue ratio has reached 300 percent, so government revenue is compared to revenue, so the government's debt ratio is three times greater than its revenue.

Meanwhile, if viewed from several indicators such as debt service domestic government revenue set by the IMF, the government's debt position is no longer safe.

However, if using the government debt ratio indicator to GDP, Indonesia's debt position is still safe because it is still below the safe limit of 60 percent.

Meanwhile, government debt until May 31, 2024 has reached IDR 8,353.02 trillion.

In nominal terms, the government's debt position increased by IDR14.59 trillion or increased by 0.17 percent compared to the debt position at the end of April 2024 which was IDR 8,338.43 trillion.

Meanwhile, the government debt ratio to GDP is 38.71 percent. This figure also increased from the debt ratio to GDP in the previous month which was 38.64 percent.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Thursday, July 25, 2024 in the price range of IDR 16,200 - IDR 16,250 per US dollar.