Rupiah Potentially Strengthens To Rp15,420 Per US Dollar, This Is The Cause

Dollars and rupiah (photo: Antara)

JAKARTA - The rupiah exchange rate in trading Wednesday, August 28, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, August 27, 2024, the rupiah exchange rate on the spot market closed down 0.37 percent at the level of Rp15,459 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate closed lower by 0.83 percent to a price level of Rp15,509 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said the US dollar strengthened slightly on Tuesday and the main currency was trading sideways due to concerns that still existed over tensions in the Middle East partially offset investor optimism for cutting US interest rates soon to occur.

"However, the main currency persists near a historic high and the dollar is close to its lowest level in more than a year, assisted by a possible cuts in US interest rates in September after Federal Reserve Chairman Jerome Powell more or less approved the move in his speech at Jackson Hole on Friday," he said in a statement. his statement, quoted Wednesday, August 28.

Ibrahim said that the Fed's aggressive interest rate hike cycle and expectations of how much the US interest rate could go up further have been a major driver of the dollar's power over the past two years, putting other currencies under pressure.

According to Ibrahim markets have fully taken into account next month's interest rate drop, and seen an easing of about 100 basis points by the end of the year.

From a domestic perspective, Bank Indonesia (BI) projects that national economic growth in the year will range from 4.7 to 5.5 percent. This figure does not move far from Indonesia's economic growth in the second quarter of 2024, which is 5.05 percent on an annual basis (yoy).

In order to achieve this economic growth target, the government needs to increase household consumption. This is due to the end of seasonal factors, such as national religious holidays (HBKN) and the impact of the election in the first semester of 2024.

In addition, the National Strategic Project (PSN) can increase investment, especially private investment. The increase in fiscal stimulus from 2.3 percent to 2.7 percent of GDP is also expected to effectively have a multiplier impact on the economy.

Indonesia's economic growth is currently supported by strong domestic demand and increased export performance. In terms of expenditure, household consumption as the main contributor grew by 4.93 percent (yoy) driven by the holiday period for religious holidays and longer school holidays.

Then, the government tries to maintain people's purchasing power by controlling inflation, increasing the salaries of state civil servants (ASN), providing the 13th salary with a 100 percent performance allowance, and creating a larger new job field in early 2024 of 3.55 million.

Meanwhile, government consumption grew positively by 1.42 percent, mainly supported by the absorption of capital expenditures and goods expenditures, respectively by 39.5 percent and 6.1 percent.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Wednesday, August 28, 2024, in the price range of IDR 15,420 - IDR 15,520 per US dollar.