Market Awaits US Economic Data, Rupiah Potential to Strengthen to IDR 15,970

Illustration (Photo: Doc Antara)

JAKARTA - The rupiah exchange rate on Monday, August 12, 2024, is expected to strengthen against the United States (US) dollar.

Quoting Bloomberg, the rupiah exchange rate on Friday, August 9, 2024, the rupiah exchange rate on the spot market closed down 0.19 percent at IDR 15,925 per US dollar.

Meanwhile, the rupiah exchange rate at Bank Indonesia's (BI) Jakarta Interbank Spot Dollar Rate (Jisdor) closed down 0.23 percent to IDR 15,914 per US dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi said that new US labor market data showed that unemployment benefits fell more than expected last week, easing fears of an imminent recession.

"Initial jobless claims fell to a seasonally adjusted 233,000 for the week ended August 3, the Department of Labor said on Thursday, indicating that concerns that the labor market was unraveling were overblown," he said in his statement, quoted Monday, August 12.

Investors will now focus on the US consumer price inflation report for July due next week, as well as comments by Fed Chair Jerome Powell at the central bank's Jackson Hole Economic Policy Symposium on August 22-24.

Domestically, the International Monetary Fund (IMF) assessed that Indonesia's economic growth remains strong amid external turmoil with inflation maintained within the target range and a resilient financial sector.

The IMF projects that Indonesia's economic performance will remain high, at 5 percent in 2024 and 5.1 percent in 2025.

Ibrahim explained that what made the Indonesian economy improve was that Indonesia's prudent policy framework in the monetary, fiscal, and financial sectors was considered to have created a solid foundation for macro stability and social welfare.

The IMF expressed its appreciation and positive notes regarding the policy steps that have been taken by the Indonesian authorities.

The appreciation was mainly conveyed regarding several important points. First, Indonesia's commitment to fiscal discipline.

Next, second, a decrease in inflation in accordance with the target range that has been set and a monetary policy that takes into account data developments (data dependent), market deepening efforts, and efforts to strengthen the effectiveness of monetary policy transmission.

Third, efforts to strengthen the macroprudential policy framework. Fourth, the growth agenda towards high-income country status by 2045.

Fifth, a commitment to achieving the target of zero carbon emissions or net zero-emissions by 2060 and steps taken to limit greenhouse gas emissions and deforestation.

However, the IMF reminded that there are several risks that need to be watched out for, such as commodity price volatility, slowing growth in major trading partner countries, and spillovers due to high-for-longer conditions in global finance.

Ibrahim estimates that the rupiah will fluctuate, but close stronger in trading on Monday, August 12, 2024 in the price range of IDR 15,880 - IDR 15,970 per US dollar.