US Economic Data Wait Market, Rupiah Potentially Strengthens

Rupiah and US dollars (Photo: intermediate)

JAKARTA - The rupiah exchange rate in trading Wednesday, September 4, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, September 3, 2024, the rupiah exchange rate on the spot market closed down 0.01 percent at the level of Rp15,526 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate closed lower by 0.14 percent to a price level of Rp15,557 per US dollar.

Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi said that currently the attention of investors is turning to reports of future US jobs which are expected at the end of the week.

"The report, which will be released on Friday, is anticipated to play an important role in shaping the Federal Reserve's monetary policy, especially after Fed Chair Jerome Powell signaled a shift from focusing on inflation to preventing job loss," he said in a statement, quoted Wednesday, September 4.

Ibrahim said there was a 33 percent chance for a 50-base point cut this month, with a quarter-point deduction expected to be complete. This is a slight change from the previous week when the chances of a larger cut were at 36 percent.

The market has anticipated a cut in interest rates by the Federal Reserve, with a 25-base point reduction having been taken into account in expectations for several weeks.

According to Ibrahim, the strength of the dollar previously reflected this sentiment as it hit its highest level since August 20, driven by an increase in long-term Treasury yields to its highest point since mid-August.

"The increase in yields follows inflationary data indicating that the Fed may choose a smaller cut in interest rates," he explained.

Ibrahim said the US economic resilience was further emphasized by recent gross domestic product figures, which show that the Federal Reserve has the flexibility to moderate its policy easing.

Despite this, Ibrahim said traders were still betting on the possibility of lowering interest rates from the Fed.

"The results of the upcoming work report are likely to have a significant impact on the dollar track in the near future. One of them is that the salary figure is stronger than expected and the lower unemployment rate is likely to give the market a greater confidence that the risk of growth has eased," he said.

Domestically, debt in developed countries jumped from 70 percent to 112 percent of gross domestic product (GDP), while in developing countries the increase in the number of post-pandemic debt from 47 percent of GDP in early 2000 now reached 71 percent.

Meanwhile, Indonesia's debt is relatively maintained amidst global uncertainty and high geopolitical tension in the world.

Until the end of July 2024, the debt ratio fell again to 38.68 percent, which means it is still far below the safe limit of 60 percent as stipulated in Law Number 17 of 2003 concerning State Finance.

The surge in debt in various countries is due to fiscal space and monetary space which has become very narrow due to the condition of the whole world which has not fully recovered during the pandemic, and the occurrence of war and geopolitical tension.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Wednesday, September 4, 2024, in the price range of IDR 15,450 - IDR 15,550 per US dollar.