US Inflation Data Wait Market, Rupiah Predicted Weakening

Rupiah and US dollars (Photo: intermediate)

JAKARTA - The rupiah exchange rate in trading Wednesday, November 13, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, November 12, 2024, the rupiah exchange rate on the spot market closed down 0.59 percent at the level of Rp15,782 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate closed lower by 0.60 percent to a price level of Rp15,771 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said the market was betting that the inflation policy under Trump would maintain high interest rates in the long term.

"Dolar shot to a four-month high this week, while Treasury yields are also moving up. Trump's protectionist attitude towards trade and immigration is expected to be a higher inflation factor," he said in his statement, quoted Wednesday, November 13.

Ibrahim said the focus this week is on the main US consumer price index inflation data, which is expected to show inflation remains stable in October. The reading is also likely to be an expectation factor for interest rates.

In addition, beyond the reading of inflation, a number of Federal Reserve officials will also address this week, giving more signs of policy after the central bank cut interest rates by 25 basis points last week.

Traders are seen estimating a 66.7 percent chance to cut 25 bps again in December, and a 33.3 percent chance interest rate will remain unchanged, the CME Fedwatch shows.

Meanwhile, from within the country, retail sales performance in October 2024 is expected to decline. This is reflected in the October 2024 Real Sales Index (IPR) which is predicted to reach 209.5 or grow slowly by 1.0 percent (yoy).

However, if viewed monthly, the IPR in October contracted 0.5 percent (mtm). Meanwhile, the IPR in October 2024 is lower than the IPR last September which reached 210.6.

Bank Indonesia claims retail sales performance improves monthly, despite contracting.

BI said the retail sales performance in October was supported by an increase in sales of the Cultural and Recreational Goods Group, the Parts of Cadang and Accessori, and the Subgroup of Sandang.

In September 2024, BI recorded that the IPR was still growing. IPR was recorded at 210.6 or grew by 4.8 percent (yoy), lower than in August 2024 which grew 5.8 percent (yoy).

This growth was supported by an increase in sales of the Motor Vehicle Fuel Group and the Parts of Cadang and Accessori.

In terms of price, inflationary pressures for the next 3 and 6 months, namely in December 2024 (Christmas and New Year) and March 2025 (the month of Ramadan) are predicted to increase.

This is reflected in the General Price Expectation Index (IEH) in December 2024 and March 2025, which were recorded at 152.6 and 169.4, respectively, higher than the previous period which was recorded at 134.3 and 155.9.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading on Wednesday, November 13, 2024, in the price range of IDR 15,770 - IDR 15,880 per US dollar.