Market Focuses On US Interest Rate Cut Policy, Rupiah Is Predicted To Weaken

Rupiah and US Dollars (Photo: Antara)

JAKARTA - The rupiah exchange rate in trading Thursday, November 7, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Wednesday, November 6, 2024, the rupiah exchange rate on the spot market closed down 0.53 percent at the level of Rp. 15,833 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.46 percent to a price level of Rp. 15,840 per US dollar.

Director of PT.Laba Forexindo Berjangka Ibrahim Assuaibi said Trump, who outperformed Kamala Haris in the 2024 presidential election and has the potential to keep interest rates high and the dollar remains strong in the coming years and the soaring returns of Treasury.

"Trump is widely expected to impose more inflationary policies, given its establishment on protectionist and immigration trade. Such a scenario is expected to make interest rates relatively higher in the long term," he said in his statement, quoted Thursday, November 7.

Ibrahim said the focus this week was also focused on the Federal Reserve meeting, where the central bank is widely expected to cut interest rates by 25 basis points.

Meanwhile, from within the country, Ibrahim explained that Indonesia's economic growth in the third quarter of 2024 was sloping. The weakening growth could not be separated from the meland consumption of Indonesian households.

"This is a bad start for President Prabowo Subianto at the beginning of his reign. Moreover, consumption is the main engine to drive Indonesia's economic growth," he said.

The Central Statistics Agency has released data on Indonesia's economic growth down to 4.95 percent (yoy) for the third quarter of 2024 or worst in the past year. This figure is lower than the second quarter of 2024 which was at 5.05 percent and this position is also the lowest since the third quarter of 2023, which at that time grew by 4.94 percent (yoy).

Based on expenses, it appears that household consumption has grown by less than 5 percent or to be precise 4.91 percent (yoy). Even though consumption contributed 53.08 percent of Indonesia's total GDP. The growth in consumption in the third quarter was also below historical data, which was 5 percent.

Domestic consumption growth in July-September 2024 is equivalent to the first quarter of 2024 and worst since the fourth quarter of 2023. The decline in household consumption was influenced by seasonal factors. In the previous two quarters there were Ramadan, Eid al-Fitr and long weekend holidays.

Ibrahim said that the sloping consumption of this household was not without reason. There are six supporting sub-sectors for household consumption that are sloping, namely Restaurants and Hotels, Transportation and Communication, as well as Housing and Household Equipment. While the rest seems to have increased.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Thursday, November 7, 2024, in the price range of IDR 15,820 - IDR 15,920 per US dollar.