Rupiah Potentially Weakens Driven by US Economic Data

Dollars and rupiah (photo: Antara)

JAKARTA - The rupiah exchange rate on Tuesday, October 29, 2024, is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the rupiah exchange rate on Monday, October 28, 2024, the rupiah exchange rate on the spot market closed down 0.49 percent at IDR 15,724 per US dollar. Meanwhile, the rupiah exchange rate at the Jakarta Interbank Spot Dollar Rate (Jisdor) Bank Indonesia (BI) closed down 0.50 percent to IDR 15,729 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said that most traders are leaning towards the US dollar in anticipation of the 2024 presidential election, which is only a week away.

"The inflow into the US dollar is also driven by expectations of increasing political uncertainty in Japan, after the ruling Liberal Democratic Party-led coalition lost its parliamentary majority in the weekend election," he said in his statement quoted on Tuesday, October 29.

Meanwhile, concerns over a larger conflict in the Middle East eased after Israel refrained from attacking Iran’s oil and nuclear facilities in an attack over the weekend. While Tehran did threaten to retaliate, Iranian leaders have also played down the impact of the Israeli strikes.

Ibrahim said concerns over an Israeli attack on Iran in early October have been a major sticking point for markets, especially given concerns that any damage to Iran’s oil or nuclear infrastructure would mark a dire escalation in the conflict.

The focus this week will be on a series of key economic readings for more clues, with gross domestic product data from the US and eurozone due in the coming days, while the PCE price index, the Federal Reserve’s preferred inflation gauge, is also due later this week.

Domestically, the government will have to face its responsibilities in 2025 to pay maturing debts, including debts resulting from burden sharing with Bank Indonesia during the COVID-19 pandemic.

According to the records of the Audit Board of Indonesia (BPK), there is a maturity of Government Securities (SBN) purchased by Bank Indonesia (BI) based on Joint Decree (SKBI) II worth IDR 100 trillion in 2025.

Looking at the Audit Result Report (LHP) on the Central Government Financial Report (LKPP) for 2021, it is recorded that from the issuance of SBN in the framework of SKB II and SKB III, there is SBN in the form of SUN Variable Rate (VR) series which is specifically sold to BI in the Primary Market in the framework of SKB II and SKB III with a total value of IDR 612.56 trillion.

The maturity of the debt starts in 2025 worth IDR 100 trillion, and will continue with varying figures until 2029 or when the Red and White Cabinet ends later.

Meanwhile, the SKB is a commitment from the government and BI in carrying out burden sharing or sharing the burden in financing the handling of COVID-19.

Where BI acts as a standby buyer through SKB I. In SKB II, the government immediately becomes a direct placement. Meanwhile, in SKB III, the government also became a direct placement, but specifically for health and humanitarian.

Meanwhile, the government's obligations are only part of the total debt due and interest on debt that the government must fulfill next year.

In total, the Ministry of Finance (Kemenkeu) noted that the government's debt maturity profile in 2025 reached IDR 800.33 trillion. This amount consists of SBN maturities of IDR 705.5 trillion and loan maturities of IDR 94.83 trillion. Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, October 29, 2024 in the price range of IDR 15,710 - IDR 15,810 per US dollar.