The Turmoil Of Indonesian Politics And The Fed Rupiah Policy Predicted To Be Fluctuating To Weaken

Rupiah (photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, August 23, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, August 22, 2024, the rupiah exchange rate on the spot market closed down 0.64 percent at the level of Rp15,600 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate closed lower by 0.79 percent to a price level of Rp15,579 per US dollar.

Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi said the dollar index rose 0.2% in trading yesterday, rising again from three days of a sharp decline that puts the greenback at a seven-month low.

"Meanwhile, the dollar's weakening comes amid an increasing bet on September's rate cuts, with Fed meeting minutes late July, released on Wednesday, showing most policymakers favor lower interest rates," he said in a statement, quoted Friday, August 23.

Ibrahim conveyed that the sharp downward revision of US payroll data for the year to March 2024 further strengthens the reasons for lower interest rates.

However, the revision also sparked new concerns that the slowing labor market signifies the US recession, especially as payroll data for recent months has also shown weakening.

From the domestic side, only one day later, the decision of the Constitutional Court (MK) which was considered a breath of fresh air for democracy was robbed through the approval of the revision of the Pilkada Law which took place briefly at the Legislation Board of the House of Representatives (DPR).

Eight of the nine factions in the DPR agreed to only apply part of the Constitutional Court's decision regarding the conditions for nominating regional heads in the draft amendment to the Pilkada Law.

The decision taken at a working meeting at the House of Representatives Legislation Body on Wednesday, August 21, is considered an disobedience that will lead to a false democratic process in the 2024 regional elections.

The Pilkada Bill which has been discussed by the DPR and the government on Wednesday afternoon is planned to be ratified at the DPR Plenary Meeting, Thursday, August 22.

Disobedience of the DPR against the decision of the Constitutional Court (MK) as a fatal mistake. As previously reported, the DPR through the Legislation Body seeks to annul the Constitutional Court's decision regarding the threshold for candidacy and the age of candidates for the Pilkada through the revision of the Pilkada Law, the discussion of which was accelerated on Wednesday, August 21, 2024.

As a result, the DPR's attitude triggered a wave of mass action in various regions. This too, becomes a negative sentiment towards the Garuda currency. The DPR and the government should build a conducive, transparent, and measurable investment climate. This is because business actors will include political risks in planning their business expansion.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Friday, August 23, 2024, in the price range of IDR 15,590 - IDR 15,650 per US dollar.