Today's Rupiah Has The Potential To Strengthen Driven By The Expetition Of The Fed's Interest Rate Reduction

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, October 25, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, October 24, 2024, the rupiah exchange rate on the spot market closed up 0.27 percent at the level of Rp15,584 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.17 percent to a price level of Rp15,593 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi conveyed that the latest comments from Fed officials had indicated that the central bank would take a gradual approach to cut interest rates.

Ibrahim said the market expected an 88.9 percent chance for a 25-base point cut at the Fed meeting in November, with 11.1 percent chance that the central bank kept interest rates stable, according to FedWatch Tool CME.

"The market fully estimates a decline of at least 25 bps a month ago, with a 53 percent chance of a 50 bps drop," he explained in his statement, quoted Friday, October 25.

Domestically, the International Monetary Fund (IMF) projects that Indonesia's inflation rate will be stable at the level of 2.3 percent by the end of 2024. Meanwhile, the October 2024 edition of the World Economic Outlook, which was published by the Indonesian IMF in inflation in 2025, is predicted at the level of 2.5 percent.

Meanwhile, the global inflation rate is projected to reach 3.5 percent by the end of 2025, below the average level of 3.6 percent in 2000 and 2019. In addition, global economic growth is projected to remain stable at 3.2 percent by 2024 and 2025.

Previously, Finance Minister Sri Mulyani Indrawati said the uncertainty in the global financial market had eased, supported by the easing of monetary policy by several major countries responding to slowing inflationary pressures.

Meanwhile, Bank Indonesia (BI) continues to be committed to strengthening the effectiveness of monetary policy in order to keep inflation under control in the target of 2.5 percent plus minus 1 percent, while still supporting efforts to strengthen economic growth.

Where the Inflation of the Consumer Price Index (JCI) was recorded to be low in all components, reaching 1.84 percent yoy in September 2024. Core inflation was recorded at 2.09 percent yoy, while volatile food (VF) inflation continued to decline to 1.43 percent yoy.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, October 25, 2024 in the price range of IDR 15,540 - IDR 15,600 per US dollar.