The Rupiah Is Expected To Strengthen Again Driven By The Expetition Of The US Interest Rate Scarcity

US and Rupiah dollars (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Monday, December 2, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Friday, November 29, 2024, the rupiah exchange rate on the spot market closed up 0.40 percent at the level of Rp15,872 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.41 percent to a price level of Rp15,864 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the market maintains expectations that the Federal Reserve will continue to cut interest rates in December.

"The traders are seen betting on the 68.6 percent chance that the Fed will cut interest rates by 25 basis points, and the 31.4 percent chance that interest rates will remain unchanged, according to the CME Fedwatch," he said in his statement, quoted Monday, December 2.

In addition, Ibrahim said the stakes on December's cuts continued despite recent data showing US inflation's resilience, while Fed officials supported the gradual easing of interest rates.

However, Ibrahim said the long-term outlook for US interest rates was uncertain, considering inflation was still well above the Fed's target of 2 percent. Expansive policies under Trump are also expected to support inflation and interest rates.

"A number of Fed officials, including Jerome Powell, will give a speech next week, before the interest rate decision in December," he said.

Meanwhile, from within the country, the public reminded the government to be careful in making regulations related to tax increases by 12 percent because the current global economic condition is not doing well, so it will affect reducing people's purchasing power.

Ibrahim said that the government had indeed implemented a tax rate of 12 percent in accordance with the mandate of the law that had been approved by the DPR RI and ratified by the government.

According to Ibrahim, one of the problems in taxation is the low tax ratio for Indonesia compared to the G20 countries and several countries in ASEAN.

Meanwhile, the Chairman of the National Economic Council (DEN), Luhut Binsar Pandjaitan, stated that the plan to increase the Value Added Tax (VAT) rate to 12 percent will most likely be postponed. The postponement was carried out to provide space for the government in providing a stimulus in the form of subsidies for low-income people.

Subsidies will be provided in the form of social assistance (bansos) in the form of electricity subsidies. This policy was chosen to avoid the risk of misuse of Direct Cash Assistance (BLT) funds. The government's budget is sufficient to fund the subsidy, although this policy is still in the proposed and design stages.

In addition, national tax revenues are in good condition, so there are adequate funds to support the stimulus program.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Monday, December 2, 2024, in the price range of IDR 15,750 - IDR 16,850 per US dollar.