The Rupiah Is Predicted To Weaken To IDR 16,000 Per US Dollar Driven By The Decreased Expetition Of US Interest Rates Down

Rupiah and US dollars (Photo: intermediate)

JAKARTA - The rupiah exchange rate in trading Friday, November 22, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Thursday, November 21, 2024, the rupiah exchange rate on the spot market closed down 0.38 percent at the level of Rp. 15,930 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.52 percent to a price level of Rp. 15,942 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi expressed hope that the flow of interest rates has been reduced, although unstable, in recent weeks.

"The market estimates a 52 percent chance of lowering interest rates by 25 basis points at a Fed meeting in December, down from 82.5 percent a week ago, according to CME's FedWatch Tool," he said in a statement, quoted Friday, November 22.

A Reuters poll shows most economists expect the Fed to cut interest rates at a December meeting, with a shallower drop in 2025 than expected a month ago due to higher inflation risk than Trump's policy.

In addition, Ibrahim conveyed the latest comments from Fed officials, including Chairman Jerome Powell, having shown that the central bank is slow and measurable in its rate-depletion pathway.

"Investors are waiting for Trump to appoint a finance minister, one of the highest-profile cabinet posts overseeing state financial and economic policies. Some of Trump's other options have raised questions about their qualifications and experience," he explained.

Meanwhile, from within the country, Bank Indonesia revealed that there will still be room for lower interest rates or BI Rate in the future, although it will be limited. The decline in BI interest rates will consider low inflation, as well as national economic growth.

Furthermore, seeing the rapid development of global dynamics, BI is currently focused on strengthening the stability of the rupiah exchange rate from the impact of the increasing geopolitical uncertainty to the global economy, with the development of US politics after Donald Trump's victory as president.

Thus, the direction of BI's interest rate policy in the future will continue to pay attention to the movement of the rupiah exchange rate and the prospect of domestic inflation as well as the development of data and dynamics of developing conditions in observing the space for further interest rates to decrease.

Previously, BI decided to hold the interest rate or BI Rate at 6 percent, with the Deposit Facility interest rate at 5.25 percent, and the Lending Facility rate at the Board of Governors Meeting (RDG) November 2024.

The decision to detain the BI Rate is consistent with the direction of monetary policy to ensure controlled inflation in 2024 and 2025 under target of 2.5 plus minus 1 percent, as well as support sustainable economic growth and stability of the rupiah exchange rate due to increased uncertainty in the global financial market.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, November 22, 2024, in the price range of IDR 15,920 - IDR 16,000 per US dollar.