The Rupiah Is Expected To Weaken Driven By US Economic Policy

US and Rupiah dollars (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Tuesday, December 3, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Monday, December 2, 2024, the rupiah exchange rate on the spot market closed lower by 0.36 percent at the level of Rp. 15,906 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.30 percent to a price level of Rp. 15,905 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said Donald Trump threatened to impose a 100 percent tariff on the BRICS block and warned against looking for alternatives other than the US dollar.

"The threat is to damage the block's currency and push the dollar up, as traders are concerned about tighter protectionist policies from the US under Trump," he said in a statement, quoted Tuesday, December 3.

In addition, Ibrahim said Donald Trump last week threatened to impose additional tariffs on China, Canada, and Mexico where the move would be able to re-trigger global trade wars.

In addition, in Asia, manufacturing activity increased more than expected in November, according to government and private purchase manager index data. The reading comes as Beijing launched a series of aggressive stimulus measures since late September, aimed at supporting economic growth.

Ibrahim explained that although these measures seem to have paid off, the market is concerned more about the economic barriers to the trade war with the US.

"Traders are also waiting for more stimulus steps from the two main political meetings which will take place at the end of December," he said.

Meanwhile, from within the country, the Indonesian Manufacturing Purchasing Manager's Index (PMI) was at 49.2 in October 2024. This index shows that there is still no change in the crucial sign of 50 for four consecutive months.

The condition of PMI which is still stagnant is inseparable from the purchasing power of the people who are weakened. If you look at it, not only Indonesia has experienced a manufacturing contraction but the Asean countries have also experienced the same thing.

Efforts to encourage manufacturing are carried out by taking into account the market conditions, both domestic and foreign markets. Industrial conditions are directly related to purchasing power. Therefore, efforts to improve the manufacturing sector must be carried out in line with increasing people's purchasing power.

In addition, the Central Statistics Agency (BPS) stated that inflation in November 2024 reached 0.30 percent or higher than October 2024, which was 0.08 percent, but still lower when compared to November 2023.

The largest monthly inflation contributor expenditure group in November 2024 was food, beverages, and tobacco with inflation of 0.78 percent and contributed 0.22 percent of inflation. Commodities that encourage inflation in this group are shallots and tomatoes, each of which contributes 0.10 percent of inflation.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, December 3, 2024, in the price range of IDR 15,890 - IDR 15,970 per US dollar.