Rupiah Potentially Strengthens Amid Market Waits For US Economic Data Results

Illustration (Photo: Doc Antara)

JAKARTA - The rupiah exchange rate in trading Wednesday, September 11, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, September 10, 2024, the rupiah exchange rate on the spot market closed slightly up 0.01 percent at the level of Rp15,455 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) of Bank Indonesia (BI) closed slightly higher by 0.01 percent to a price level of IDR 15,447 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi expressed his anticipation of cutting US interest rates helping to limit overall losses, while also stemming the dollar increase. But the US dollar received several purchase offers this week, in the middle of a pre-reading position for inflation on Wednesday.

Ibrahim said the focus this week is on data on inflation of the consumer price index, which will be released on Wednesday, to get more clues about the US economy.

"The signs of easing inflation will likely spur an increase in betting on lower interest rates in the coming months," he said in a statement, quoted Wednesday, September 11.

Ibrahim said Wednesday's inflation reading comes just a week before the Federal Reserve meeting, where the central bank is widely expected to cut interest rates by 25 basis points.

The expectations of cutting interest rates in September were also the main driver of the recent US dollar's weakening, given the cuts are likely to trigger an easing cycle by the Fed.

From the domestic side, retail sales in the country, which are again stretched amid the strong vibecession phenomenon, provide hope for the resilience of the domestic economy when the wave of layoffs is getting bigger.

The results of a retail sales survey reported by Bank Indonesia, which was reported on Tuesday, reported that the Real Sales Index in August was estimated to have scored positive growth at 5.8 percent year-on-year (yoy), the highest growth rate in the last four months. This figure also increased compared to July by 4.5 percent (yoy), by 219.5.

On a monthly basis, retail sales also grew positively by 1.8 percent month-on-month (mom), after contracting in the previous month quite a bit to 7.2 percent (mom).

The achievement of better retail sales last month was mainly supported by the momentum of celebrating the Independence Day of the Republic of Indonesia which commonly triggers people to shop more, especially in the group of cultural and recreational goods which grew 2.8 percent (yoy).

Likewise, sales in food and beverage groups grew by 1.5 percent (mom).

Bank Indonesia estimates that retail sales performance in the third quarter of 2024 will be better than the previous quarter. The Retail Sales Index in this quarter is estimated to grow 5.1 percent (yoy), from 0.7 percent in the second quarter of 2024.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Wednesday, September 11, 2024, in the price range of IDR 15,400 - IDR 15,500 per US dollar.