The Rupiah Is Predicted To Weaken Again Amid The Expetition Of US Interest Rate Cuts

Illustration (Photo: Doc Antara)

JAKARTA - The rupiah exchange rate in trading Wednesday, December 4, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, December 3, 2024, the rupiah exchange rate on the spot market closed down 0.25 percent at the level of Rp. 15,945 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.28 percent to a price level of IDR 15,950 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said investors remained biased about the greenback before further signaling about US monetary policy this week.

"A number of Fed officials will address in the coming days, especially Jerome Powell on Wednesday. His speech was delivered just weeks before the last Fed meeting for this year, where the central bank is widely expected to cut interest rates by 25 basis points," he said in his statement, quoted Wednesday, December 4.

In addition, Ibrahim said, uncertainty grows over long-term prospects for interest rates, especially given the signs of strong inflation and resilience in the labor market.

In addition, non-farm payroll data for November will be released this Friday and is widely expected to be a factor in Fed's prospects for interest rates.

Ibrahim explained that the long-term prospects for interest rates were also overshadowed by uncertainty over the Trump administration.

Trump is widely expected to impose an expansive and protective policy, which could support interest rates and inflation.

Meanwhile, from within the country, Bank Indonesia (BI) reminded that global uncertainty which will increase at the end of 2024 has the potential to continue in 2025.

Therefore, close synergies from various parties must be strengthened, to anticipate and mitigate the increase in global uncertainty triggered by geopolitical escalation which is heating up and changes in policies in developed countries.

The source of that uncertainty is none other than geopolitical escalation, where war is still ongoing in several countries, and could have an impact on commodity price stability and supply chains.

Meanwhile, the direction of policy for developed countries, especially after the election of Donald Trump as President of the United States (US), could also increase uncertainty.

Since the campaign, Trump has mentioned a number of his policy plans. Meanwhile, the direction of this policy is considered by a number of parties to make inflation in the US drop slower than before.

The Fed is also projected to hold the Fed Fund Rate (FFR) or the benchmark interest rate at a high level for a longer time.

To anticipate and mitigate risks, BI will strengthen the synergy of the national economic policy mix.

BI will maintain economic stability and encourage a stronger structural transformation, with a big vision towards Indonesia Gold 20245 to be realized.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Wednesday, December 4, 2024, in the price range of IDR 15,930 - IDR 16,010 per US dollar.