Rupiah Potentially Strengthens When Market Focuses On Geopolitical Conflict

Illustration (Photo: Doc Antara)

JAKARTA - The rupiah exchange rate in trading Monday, August 19, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Friday, August 16, 2024, the rupiah exchange rate on the spot market closed up 0.04 percent at the level of Rp15,693 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate closed lower by 0.18 percent to a price level of Rp15,716 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said traders believed that the Fed would cut interest rates on September 18, but had debated the magnitude of the reduction.

Opportunities are currently at 25 percent for a huge 50 basis point cut, down from 36 percent the day before, according to the FedWatch Tool from the CME Group.

"The monthly payroll data, which was surprisingly weak at the start of the month, has pushed a greater cut chance to 71 percent," he said in his statement, quoted Monday, August 19.

Ibrahim said the market was refocusing on geopoliticals, amid warnings of a retaliatory attack from Iran against Israel over the assassination of a Hamas leader in Tehran.

In addition, a new round of negotiations began on Thursday to secure a ceasefire in the Gaza war, even as Israeli forces continued their attacks on the Palestinian enclave.

The talks, which have been boycotted by Hamas, have been extended and will resume in Qatar's capital, Doha, on Friday.

From the domestic side, Pasar responded positively to President Joko Widodo's (Jokowi) speech, which exhibited a series of infrastructure achievements that had been carried out for 10 years leading Indonesia in State Speech at the MPR/DPR/DPD RI Annual Session, Friday, August 16.

The state has been able to build a new foundation and civilization, with the development of a central Indonesia, namely building from the outskirts, from the village, and from the outermost areas. During his 10 years of leadership, the state has built 366,000 kilometers of village roads, and 1.9 million meters of village bridges.

In addition, the government under its leadership has also built 2,700 kilometers of new toll roads, 6,000 kilometers of national roads, 50 ports, and new airports, as well as 43 dams, and 1.1 million hectares of new irrigation networks.

The results of these developments made logistics costs decrease to 14 percent in 2023, which was previously 24 percent.

In addition, Indonesia's competitiveness has also risen from the previous position of 34 to 27 in 2024. And Indonesia is able to strengthen unity because access is more equitable and fair.

Indonesia's ranking even beat England, which is ranked 28, Malaysia, which is ranked 34, Japan at 38, the Philippines at 52 and Turkey at 53.

Quoted from the IMD record, the competitiveness rating was boosted by high business efficiency (14), government efficiency (23), and economic performance (24).

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Monday, August 19, 2024, in the price range of IDR 15,640 - IDR 15,720 per US dollar.