Market Awaits US Inflation Data, Rupiah Projected to Continue Weakening

Illustration (Photo: Doc Antara)

JAKARTA - The rupiah exchange rate on Thursday, November 14, 2024, is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the rupiah exchange rate on Wednesday, November 13, 2024, the rupiah exchange rate on the spot market closed down 0.01 percent at IDR 15,784 per US dollar.

Meanwhile, the rupiah exchange rate at Bank Indonesia's (BI) Jakarta Interbank Spot Dollar Rate (Jisdor) closed down 0.07 percent to IDR 15,782 per US dollar.

Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi said the market is turning to upcoming consumer price index inflation data for further cues on interest rates.

"The reading is expected to show inflation remained stable in October, which is a bad sign for bets on continued monetary easing by the Federal Reserve," he said in his statement, quoted on Thursday, November 14.

Ibrahim said Trump's election victory added uncertainty to the inflation outlook. The president-elect is widely expected to launch more expansionary policies during his second term, which brings the prospect of higher inflation and interest rates.

In addition, some hawkish comments from Federal Reserve officials also weighed on sentiment, with Minneapolis Fed President Neel Kashkari warning that any increase in inflation could prompt the Fed to keep interest rates steady in December.

Meanwhile, domestically, in order to achieve this year's economic growth target of 5.1 percent.

The government is making every effort to boost economic growth in the fourth quarter of 2024, which must grow by 5.3 percent annually. This is to meet the economic growth target in the 2024 State Budget (APBN) of 5.1 percent (yoy).

All policymakers need to work hard, especially for government spending, the cycle in the fourth quarter is usually high.

Based on this cycle, the government generally makes large capital expenditures at the end of the year.

Meanwhile, the policy of cutting the travel budget for government employees will not have a major impact on government spending as long as it is not capital expenditure that is cut.

The reason is, the portion of capital expenditure will have a greater impact on the economy.

On the other hand, the government also hopes that household consumption will improve and increase at the end of the year with the National Religious Holidays (HBKN) of Christmas and New Year (Nataru).

From the investment side, investors will continue to come to the country at the end of this year. As a result, Gross Fixed Capital Formation (PMTB) will be higher in the fourth quarter of 2024.

Previously, the Ministry of Investment and Downstream noted that investment realization in Q3/2024 reached IDR431.48 trillion or grew by 15.24 percent (yoy).

Ibrahim estimated that the rupiah would fluctuate but close lower on Thursday, November 14, 2024, in the price range of IDR 15,770-IDR 15,850 per US dollar.