Rupiah Potentially Strengthening Driven By US Policy Easing Market Expetitation

Illustration (Photo: Doc Antara)

JAKARTA - The rupiah exchange rate in trading Tuesday, October 1, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday, September 30, 2024, the rupiah exchange rate on the spot market closed down 0.10 percent at the level of Rp. 15,140 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.03 percent to a price level of IDR 15,144 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the market would wait to hear from Federal Reserve Chairman Jerome Powell for instructions on the pace of monetary easing of the central bank, and seven other Fed policymakers who will speak this week.

"Also data will be released on job vacancies and private recruitment, together with an ISM survey on manufacturing and services. With the Fed and other major central banks starting to relax policies, economic recovery is likely to occur soon," he said in his statement, quoted Tuesday, October 1.

In addition, the Middle East conflict reheated after Israel stepped up its attacks on Iran-backed militant groups Hezbollah and Houthi.

Israel claimed it had bombed Houthi targets in Yemen on Sunday, expanding its confrontation with Iranian allies two days after killing Hezbollah leader Sayyed Hassan Nasrallah in an escalating conflict in Lebanon.

From a domestic perspective, the market supports the government's discourse to withdraw debt at the beginning (prefunding) to finance the 2025 State Budget or the budget for the first year of President-elect Prabowo Subianto's administration.

Meanwhile, the prefunding was carried out through foreign exchange securities (SBN), not rupiah SBN.

Previously, the government's discourse to prefund the 2025 State Budget was disclosed by the Director of Financing Strategy and Portfolio, the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance, Riko Amir.

Foreign liquidity will greatly help close gaps, aka long-term investment needs.

Moreover, the central bank of the United States (US) The Fed has lowered its interest rate to 50 basis points (bps) in mid-September. And it is possible that the Fed has again lowered its interest rate twice with a minimum decrease of 50 bps.

With the decline in interest rates, it is hoped that deposit funds in the US will flow outside and have the potential to flow into developing markets such as Indonesia. However, so that the government chooses the right time when issuing the SBN for the 2025 APBN prefunding.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Tuesday, October 1, 2024, in the price range of IDR 15,080-IDR 15,160 per US dollar.