Towards The End Of 2024, Rupiah Is Predicted To Strengthen

US and Rupiah dollars (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Tuesday, December 31, 2024 is expected to move higher against the United States (US) dollar.

Quoting Bloomberg, on Monday, December 30, 2024, the rupiah spot exchange rate closed higher by 0.57 percent to the level of Rp. 16,143 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.55 percent to a price level of Rp. 16,162 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the trading volume was low due to the looming New Year holidays and the somewhat empty daily data this week.

"China will release a survey of the PMI factory on Tuesday, while the US ISM survey for December will be", he said in his statement, quoted on Tuesday, December 31.

Ibrahim said that separately the World Bank had raised its forecast for China's economic growth in 2024 and 2025, though it warned that sluggish household and business trust, along with barriers in the property sector, would remain an obstacle next year.

Meanwhile, from within the country, the market responded positively to the implementation of VAT 12 percent which will take effect in January 2025 as a strategic step from the government but full of challenges.

Ibrahim said that increasing VAT aims to strengthen fiscal space to support the sustainability of long-term economic growth and this policy is selective for the people and the economy.

"This step is also accompanied by the principle of justice, because basic necessities, health services, education, and public transportation remain free of VAT, so that the burden on middle and lower income people can be minimized," he explained.

Data from the Ministry of Finance reveals that currently half of VAT incentives are enjoyed by the wealthy. Examples of luxury goods groups that were previously exempted by VAT, such as premium meat such as wagyu and kobe meat. Likewise with premium services such as international schools and VIP health services.

Ibrahim conveyed that this was part of the government's consideration to increase VAT rather than income tax (PPh) to optimize state tax revenues. The PPh tax base is smaller than VAT, because it is only imposed on certain taxpayers. Thus, the potential for state revenue from VAT is more limited than VAT which applies widely.

This policy will strengthen state revenues in the APBN so that it can support the sustainability of national development, including financing education, health and welfare programs for underprivileged communities. The government estimates the potential for tax revenue from an increase in VAT rates of IDR 75.29 trillion.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Tuesday, December 31, 2024 in the price range of IDR 16,100 - IDR 16,150 per US dollar.