Market Optimistic Fed Interest Rate Decrease, Rupiah Potential to Strengthen

US and Rupiah dollars (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate on Wednesday, October 23, 2024, is expected to strengthen against the United States (US) dollar.

Quoting Bloomberg, the rupiah exchange rate on Tuesday, October 22, 2024, the rupiah exchange rate on the spot market closed down 0.41 percent at Rp15,567 per US dollar. Meanwhile, the rupiah exchange rate at the Jakarta Interbank Spot Dollar Rate (Jisdor) Bank Indonesia (BI) closed down 0.61 percent to Rp15,560 per US dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi said that a series of positive economic data caused investors to reduce expectations about the size and speed of the Fed's interest rate cut.

"The market estimates an 87 percent chance of a 25 basis point (bps) cut at the November Fed meeting, with a 13 percent chance of the central bank keeping interest rates stable, according to the CME's FedWatch Tool," he explained in his statement, quoted Wednesday, October 23.

From within the country, Ibrahim said that President Prabowo Subianto and the Red and White Cabinet need to immediately work on completing a pile of homework and fulfilling their campaign promises.

One of the promises in his campaign was to pursue 8 percent economic growth so that Indonesia could escape the middle income trap. However, this economic growth target is not easy.

According to Ibrahim, the task of achieving the economic growth target is also a gamble on the performance of the Red and White Cabinet's 'jumbo' team. Moreover, some ministers do not come from professional circles, but also from political parties.

Of the 48 ministers appointed by Prabowo, 24 ministers come from political parties. Of the 56 deputy ministers, 18 of them come from political parties.

There are a number of points that need to be a priority for the Prabowo government. Among them, handling people's purchasing power, creating jobs, and improving the quality of institutions. These issues need to be addressed immediately by Prabowo and his staff.

Ibrahim said that if not handled properly, this could result in stagnant Indonesian economic growth, continued deindustrialization, and lower people's purchasing power.

In addition, entering the end of 2024, the risk of uncertainty in the global financial market will increase again due to geopolitical tensions between Israel, Hamas, and Hezbollah, even including confrontation between Israel and Iran.

Ibrahim said that the escalation was quite high on a geopolitical scale, thus affecting the dynamics of the global financial market, so the Prabowo government will continue to be vigilant and monitor the impact of its spread to our economy.

Ibrahim estimated that the rupiah would fluctuate but close stronger in trading on Wednesday, October 23, 2024 in the price range of IDR 15,500 - IDR 15,580 per US dollar.